Limits on RAC program led to 83% drop in recoveries, report finds

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Constraints placed on the Recovery Audit Contractor program contributed to a significant drop in improper payments recovered by the auditors in fiscal year 2015, a new federal report shows.

Medicare fee-for-services RACs identified 618,966 improper claims in FY 2015, which added up to $441 million in corrected improper payments, according to the recently published FY 2015 RAC Report to Congress. That's a nearly 83% drop from fiscal year 2014, when RACs corrected $2.57 billion in improper payments, the report showed.

That decrease is likely due to RACs being limited in the number of inpatient status reviews they were able to perform in FY 2015, the Centers for Medicare & Medicaid Services said in the report. Inpatient status reviews accounted for more than 84% of all recoveries in FY 2014.

Another factor in the decrease is the pause in the program that concluded in late October with CMS awarding five new RAC contracts.

The drop in recoveries caused by limitations to the RAC program signals a troubling sign to Medicare advocates, said Kristin Walter, spokeswoman for the Council for Medicare Integrity.

“If we want to extend the life of the Medicare program past its reported insolvency date in 2028, it's essential that Recovery Auditors are able to function continually and at their full potential,” Walter said in a statement. “We urge lawmakers to continue their support of the RAC program and allow for even more improperly billed Medicare dollars to be recovered, ensuring future healthcare coverage for the millions of retirees and disabled individuals who rely on these critical benefits each day.”