Medicare Improper Payment Recoveries Take a Tumble

Recovery Audit Contractors (RACs) recovered 83 percent fewer Medicare fee-for-service improper payments in fiscal year 2015 than FY 2014, according to a recent Medicare report. The drop was largely attributed to a ban on RACs reviewing the status of hospital patients.

The drop in recoveries could be a permanent thing, as patient status reviews are now conducted by quality improvement organizations, Judy Waltz, an attorney with Foley & Lardner in San Francisco, told me. Waltz also said future RAC recoveries will be lower due to improvements to the program that will deter RACs from making erroneous overpayment findings.

For example, the RACs’ look-back authority has been limited to six months, if hospitals file their Medicare claims within six months of service, and RACs are also facing new limits on the number of additional document requests they can make.

RACs identified $440.7 million in improper payments in FY 2015, compared with nearly $2.6 billion in FY 2014. Overall, the RACs returned $142 million to the Medicare Trust Funds in FY 2015, compared with $1.6 billion in FY 2014.

Medicare recently awarded new RAC contracts, and Waltz told me the program appears to be focused on home health and hospice providers, who have traditionally had high Medicare payment error rates. However, Waltz said home health and hospice providers often don’t have a lot of money to appeal claims denials, so some might end up filing for bankruptcy or going out of business.

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