1. Medicare Recovery Audit Contractors (RACs)
Connie Leonard, Director, Division of Recovery Audit Operations
Melanie Combs-Dyer, CMS RAC Senior Technical Advisor 1

2. Background: IPIA
Improper Payment Information Act requires federal agencies to measure improper payment rates
“Improper payments” include
overpayments
underpayments 2

3. RAC Legislation Medicare Modernization Act Section 306:
required RAC demonstration
Tax Relief Act and Healthcare of 2006, Section 302:
requires permanent and nationwide RAC program by no later than 2010
Both statutes gave CMS the authority to pay RACs on a contingency fee basis. 3

4. RAC Program Mission… to detect and correct past improper payments,
to implement actions that will prevent future improper payments.
Providers can avoid submitting claims that don’t comply with Medicare rules
CMS can lower its error rate
Taxpayers & future Medicare beneficiaries are protected
Testing with CMS staff and providers was conducted to analyze the usability of the survey questions
The 2006 MCPSS focused on prior 6 months experience with your Medicare Contractor – The 2007 MCPSS focused on prior 12 months experience
Questions that were removed tended to be those that the Contractor has no direct control over.
For example, under Provider Inquiries, the question “How quickly you receive a response to the question you asked” was dropped.
As well as “The clarity of your Contractor’s instructions about Medicare billing regulations or codes” 4

5. Results of the RAC Demonstration Collections exceeded costs
Overpayments Collected:
$992.7 m
Less Underpayments Repaid: -
($37.8 m)
Less $ Overturned on Appeal:
Less PRG IRF Re-review:
($46.0 m)
($14.0 m)
Less Costs to Run Demo:
($201.3 m)
BACK TO TRUST FUNDS
$693.6 m
Report now available at
3/27/05-3/27/08 (Claim RACs & MSP RACs) 5

6. Results of the RAC Demonstration Appeals were minimal
Cumulative through 3/27/2008
Number of Claims with Overpayment Collections
Claims Appealed By Provider to Any Level
Appealed Claims with Decision in Provider's Favor
Percentage of Overpayment Determinations Overturned on Appeal
Number
Percent
All Claim RACs
442,915
51,357
11.6%
20,381
39.7%
4.6% 6

7. Results of the RAC Demonstration RACs affected a very small percentage of all Medicare Payments
$1.0 billion
$316 billion
Medicare Payments corrected by the RACs
Medicare Payments Unaffected by RACs
0.3%
99.7%
3/27/05-3/27/08 (Claim RACs & MSP RACs) 7

8. Results of the RAC Demonstration Most overpayments were collected from inpatient hospitals
6% IRF, $59.7m
85% Inpatient Hospital,
$828.3 m
2% Skilled Nursing, $16.3m
4% Outpt. Hospital, $44.0m
1% Durable Med Equip, $6.3m
2% Physician, $19.9m
<1% Ambulance/Lab/Other, $5.4m 8
SOURCE: RAC Data Warehouse

9. Lessons Learned
Concern: RACs had a significant financial impact on some providers
Change:
Limit the number of medical record requests
Limit the RAC “look-back period”
Concern: RACs were not required to hire physicians and certified coders
Change:
CMS has required each RAC to hire a physician medical director
CMS has required each RAC to hire certified coders
Concern: Some providers questioned the accuracy of RAC reviews
Change:
New issue review board (greater oversight)
Independent validation contractor
Annual accuracy rates for each RAC
Concern: The RAC program was not transparent enough
Change:
New issues posted to web
Vulnerabilities posted to web
RAC claim status website 9

10. RAC Expansion ScheduleB
Oct. 1, 2008
March 1, 2009
Aug. 1, 2009 or later C

11. Key Website & Contact Information 11

12. Provider Feedback Questions
How would you (providers) like to learn about the Recovery Audit Contractor program? What is the best vehicle for reaching and providing outreach to providers?
How would you (providers) like to learn about vulnerabilities identified by a Recovery Audit Contractor? What format will help you in your practice or facility? (These are vulnerabilities that have been identified in a large scale. These are not specific findings for a single facility. Specific findings will be communicated through written correspondence.)
All Recovery Audit Contractors will develop a web-based tracking system to allow providers to track claims requested by a RAC. What information should the RACs include in this system? Please keep in mind that Personal Health Information (PHI) cannot be included.