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Medicare auditors find $593 million in incorrect payments

Physician organizations have been critical of the audit program, citing a high error rate.

By Charles Fiegl — Posted Oct. 20, 2011

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More than half a billion dollars in improper payments has been uncovered by Medicare auditors during the first nine months of the 2011 fiscal year.

The amount far exceeds what Medicare recovery audit contractors, or RACs, found in 2010, according to an October report to Congress by the Centers for Medicare & Medicaid Services. Last year, contractors for the Medicare program made $135.6 million in overpayment demands and collected $75 million from hospitals, physicians and other health professionals. Contractors also found $16.9 million in underpayments, which have been returned to health professionals (link).

A report on the 2011 fiscal year shows $592.5 million in improper payments between Oct. 1, 2010, and June 30, 2011. RACs collected $233.4 million during the third quarter (link).

Physician organizations and groups representing the health care industry have been critical of the audit program. Requests from RACs can take hours to fill, and demands for overpayments are unjustified at times, the groups say.

The American Medical Association has been concerned about the administrative burden placed on physician practices. The AMA notes that physicians and other health professionals won 46% of the 8,449 audit claims appealed in 2010, keeping $2.6 million in Medicare payments from being recouped by contractors.

"The error rate in the Medicare RAC process is disturbingly high, especially since the cost of filing an appeal can be prohibitive," said AMA President Peter W. Carmel, MD. "The AMA is working with CMS to improve this process and decrease the financial and administrative burden on physicians."

The report to Congress shows that contractors were most active in the western and southern regions. HealthDataInsights, a contractor based in Las Vegas, collected $30.9 million in overpayments, including $7.7 million in California and $5.3 million in Washington. Philadelphia-based Connolly Healthcare found $24.4 million, including $7.1 million in Florida and $5.8 million in Texas.

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