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As has become their custom, CMS has released the data on Medicare RAC collections for the last quarter, along with a supplemental report for the entirety of fiscal year (FY) 2011.

For the final quarter, the recovery auditors identified $353.7 million in claims’ corrections, with $277.1 million in overpayments collected and $76.6 million in underpayments returned to providers. This represents a cumulative increase of 22 percent over all corrections identified in the third quarter.

How They Did

HDI, the Region D RAC, continues its significant lead among the RACs in identifying overpayments, with $108.2 returned to the Medicare program. This represents slightly over 39 percent of all monies returned in the final quarter of the fiscal year.

The storyline behind underpayments returned to providers has shifted dramatically. Connolly, the Region C RAC, returned $60.7 million to providers in the final quarter. This number represents more than an eightfold increase from the $7.4 million returned by Connolly in the third quarter. Significantly, this number represents nearly 50 percent of all claims’ corrections identified by Connolly in the final quarter of FY 2011. In contrast, HDI, which identified $33.7 in underpayments in the third quarter, saw their total plummet to $6.9 million in the final quarter.

There were only moderate changes in the top claims’ issues identified by the recovery auditors. DCS in Region A and HDI in Region D have seen no change from their top issues identified. Region A continues with medical necessity of renal and urinary tract disorders in the inpatient setting. HDI maintained minor surgery and other treatment billed as inpatient as their top issues.

CGI in Region B has seen cardiovascular surgical procedures move to the top of its issue list, while Connolly has seen acute inpatient admission for neurological disorders make a similar jump.

Corrected Claims for FY 2011

The numbers from the final quarter bring the total identified claim corrections for FY 2011 to $939.4 million, with $797.4 million in overpayments collected and $141.9 million in provider underpayments returned. Based on the numbers from FY 2010 in the Report to Congress on RAC Activity that was released in September, the auditors have seen more than a tenfold increase in claim corrections in FY 2011.

While these numbers would appear to be encouraging to the Centers for Medicare & Medicaid Services (CMS), it is worth noting that the agency’s quarterly reports routinely make no mention of appeal success rates.

CMS has now established that it will make official appeal rates available in its annual Report to Congress, which provides ample time for multiple levels of claims’ appeals to work their way through the system.

It is also worth noting that the AHA RACTrac report indicated a provider success rate of 77 percent for appealed claims among their member hospitals that reported data. If this percentage is remotely close to the nationwide average, we should expect to see a significant reduction in the FY 2011 number of $797.4 million in overpayments in next year’s congressional report.

About the Author

Paul Spencer is the compliance officer for Fi-Med Management Inc., a national physician practice financial management company based in Wauwatosa, Wis. Paul has more than 20 years of experience across all facets of healthcare billing, including six years spent with insurance carriers. Paul acts as a physician educator on issues related to E/M level of service and documentation audits by CMS and other outside entities. Paul has carried the CPC and CPC-H credentials from the American Academy of Professional Coders since 1998.

Contact the Author


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J. Paul Spencer, CPC, COC

J. Paul Spencer is a senior healthcare consultant for DoctorsManagement. Is the national correspondent for Monitor Mondays, the live Internet radio broadcast produced by RACmonitor.

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