In a recent report on the Recovery Audit program for fiscal year (FY) 2012, CMS reports that Recovery Auditors identified $2.4 billion dollars in improper payments, including $2.3 billion in overpayments and $109.4 million in underpayments. After taking into consideration all costs, underpayment determinations returned to providers and appeal reversals, CMS reported that the Medicare Fee For Service Recovery Audit Program returned $1.9 billion to the Medicare trust fund in FY 2012.   

CMS stated that more than 91% of overpayments recovered were from inpatient hospital claims, including many short-stay cases.  CMS explained that increased appeals for short-stay inpatient hospital admission claims have led to backlogs at the Office of Medicare Hearings and Appeals (OMHA), the Administrative Law Judge level of appeal.  CMS further stated that the admissions guidance and rebilling policies released as part of the FY 2014 Hospital IPPS Final Rule should result in greater consistency in hospital billing, in turn reducing the number of improper payments and thus reducing the number of new appeals. 

CMS also reported that as of September 30, 2012, 36 states had implemented Medicaid Recovery Audit Contractor (RAC) programs. CMS granted exceptions to three states and is working with the remaining 11 states and D.C. to implement their Medicaid RAC programs.  In FY 2012, CMS reports that states recovered a total of $95.64 million through state Medicaid RAC actions.

To read the full report, click here