Last week, CMS released its report to Congress regarding the results of the FY 2014 Medicare Recovery Audit Program (the “Report”). Of note, the Report notes that RACs identified and corrected more than 1 million claims for improper payments, which resulted in $2.57 billion dollars in improper payments being corrected ($2.39 billion in overpayments; $173 million in underpayments). After taking into consideration the costs of the Recovery Audit Program, this amounts to more than $1.6 billion dollars returned to the Medicare Trust Fund (and $274 million in contingency fees to the RACs).

Inpatient hospital claims resulted in the vast majority of improper payments, yielding overpayments in excess of $2 billion dollars. Auditing of skilled nursing facilities was also very active, resulting in overpayments in excess of $85 million dollars.

Given the tremendous success of RACs in returning funds to the Medicare Trust Fund, providers would be wise to be prepared for a RAC audit. In addition to simply focusing on accurate billing, being prepared means having a team in place that knows how to respond quickly and appropriately, and whom to call for help. Being well prepared can lead to big savings. For example, the Report notes that of the total number of claims appealed in FY 2014, 22.9% were overturned with decisions in the provider’s favor (Part A overturn rate = 11.7%; Part B overturn rate of 49.5%). A complete copy of the Report can be accessed here.