Medicare RACs Identified Almost $2.4 Billion in Overpayments in FY 2014

According to CMS, the Medicare Fee-For-Service (FFS) Recovery Auditor Program identified and corrected $2.57 billion in improper Medicare payments in FY 2014. The lion’s share of this amount — $2.39 billion — represented overpayments collected, compared to $173.1 million in underpayments repaid to providers. Considering all program costs (other than expenses incurred at the third and fourth levels of appeal), CMS concluded that the Medicare FFS Recovery Audit Program returned more than $1.6 billion to the Medicare Trust Funds. Note that the overall level of FY 2014 recoveries was down from FY 2013 levels, when Recovery Audit Contractors (RACs) identified $3.75 billion in improper payments. CMS attributes some of this decrease in RAC identification of improper payments to a prohibition on certain RAC inpatient hospital patient status reviews, along with reduced reviews during the close-out process of existing RAC contracts.



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