The Centers for Medicare & Medicaid Services (CMS) report that healthcare recovery auditors (RACs) collected $2.3 billion in overpayments from providers in fiscal year 2012.  The recovery of overpayments sets a new record that is almost three times more than the $800 million in overpayments recovered in the prior year.  RACs also identified almost $100 million in underpayments.

The Medicare Recovery Audit Contractor (RAC) program is designed to identify improper Medicare payments - both overpayments and underpayments.  RACs are paid on a contingency fee basis, receiving a percentage of the improper overpayments and underpayments they collect from providers.

Audits may cover up to the prior three years of provider claims.  The scope of the audit may include ambulance, durable medical equipment, hospital inpatient and outpatient, laboratory, physician, and skilled nursing facility services.  Payment errors often involve duplicate payments, fiscal intermediaries' mistakes, medical necessity, and coding.

While many RACs have focused primarily on hospitals, American Medical News reports that CMS will direct the auditors' scrutiny of physician practices as well.  The specific targets for these audits will include the so-called high-level patient evaluation code.

John Howley, Esq.

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