RACs denied Medicare providers $2.1B in claims in fiscal 2012

Medicare recovery audit contractors (RACs) denied Medicare providers more than $2 billion in payments in fiscal year 2012, according to a report from the Centers for Medicare & Medicaid Services to Congress.

RACs identified improper payments for more than 1.2 million claims in fiscal 2012. More than 90 percent of the denials were for inpatient claims, the report said. RACs also identified $109.4 million in underpayments to providers and suppliers, according to the report. Overall, the RAC program returned more than $1.9 billion to Medicare trust funds, after all costs, fees and first-level appeals.

RACs receive between a 9 percent and 12.5 percent commission based on the dollar amount of denied claims, which critics say incentivizes denial claims regardless of their accuracy. In fiscal 2012, RACs received $142.3 million in these contingency fees, according to the report.

The CMS report that proves the program's effectiveness comes on the heels of House approval of a bill that provides a temporary fix to the sustainable growth rate (SGR) that includes language postponing recovery audits until 2015, Tom Schatz, president of the Council for Citizens Against Government Waste, said in a statement.

"The CMS FY 2012 report proves beyond a doubt that the RAC program is the most valuable tool taxpayers have ever had to reduce and recover improper payments in Medicare. Yet Congress is bending to the pressure of special interest groups, particularly the hospital associations, to eviscerate this very successful program," Schatz said. "At a time when the national debt exceeds $17.5 trillion, the Medicare Trust Fund needs every penny it can save. The anti-RAC language in the 'doc fix' bill is a direct assault on taxpayers and the Medicare Trust Fund."

To learn more:
- here's the report (.pdf)
- here's the statement