The Centers for Medicare and Medicaid Services (CMS) recently issued a report to Congress on the permanent Medicare Parts A and B Recovery Audit Contractor (A/B RAC) program in fiscal year (FY) 2010 (the Report).  According to the Report, A/B RACs identified and collected approximately $92 million improper payments. The Report also states that providers have appealed 5 percent of all claims collected in FY 2010 and have an appeals success rate of 46.2 percent. CMS notes that “monitoring appeals activity is a key part of the Recovery Audit program,” and it will continue to monitor appeals statistics.

The Report provides an overview of the A/B RAC program and the status of the implementation of the Medicare Parts C and D and Medicaid RAC programs. On January 13, 2011, CMS awarded a Medicare Part D RAC contract to ACLR Strategic Business Solutions.  CMS, however, has not set an implementation date for the Medicare Part D RAC program.  As we reported in a prior Health Headline, CMS released the Medicaid RAC final rule on September 16, 2011, with an implementation date of January 1, 2012.

The Report defines improper payments in the Medicare fee-for-service program as the following: (1) payment for items or services that do not meet Medicare's coverage and medical necessity criteria; (2) payment for items that are incorrectly coded; and (3) payment for services where the supporting documentation submitted does not support the ordered service. A/B RACs are required to report certain information to CMS regarding identified improper payments. According to the Report, CMS uses this information to identify potential program vulnerabilities and develop corrective action. CMS also notes in the Report that it is continuing to work with the provider community to reduce the burden of the RAC review process.

A copy of the Report is available by clicking here.