The Medicare Recovery Audit Contractor (RAC) program has collected $575 million in overpayments through June 2011, according to a report from the Centers for Medicare & Medicaid Services released in July.

The report examined overpayment collections from October 2009, when the RAC program was expanded nationally, through June 2011. The program is responsible for identifying and recovering improper Medicare payments.

RAC overpayment collections have grown steadily in fiscal year 2011, from $81 million for the first quarter to $233 million for the third quarter.

“This report shows that the amount the Centers for Medicare & Medicaid Services recovered in this quarter alone comes close to the amount it recovered in the first two quarters combined,” Sen. Thomas R. previous Carper (D-Del.) said July 27 in a statement. “That's remarkable progress in just a few months, but we can't rest on our laurels when there's clearly more work to be done.”

Carper, chairman of the Senate Subcommittee on Federal Financial Management, said that CMS should continue to work with the RACs to identify improper payment patterns.

Program to Be Expanded

As the statement from Carper's office explained, RAC uses private contractors to examine payments to hospitals, physicians, and other health care providers in order to identify overpayments and other payment errors. Initially the RAC program focused on the Medicare fee-for-service programs (Parts A and B). The RAC program is divided into four geographic regions.

The recovery program will expand to the Medicaid program by the end of 2011 under Section 6411 of the Patient Protection and Affordable Care Act, as well as to Medicare Part C (managed care) and Part D (the outpatient drug benefit).

In addition to the recovered overpayments, the report found that RACs have returned $110 million in Medicare underpayments to providers since October 2009, more than double the amount ($52 million) included in the CMS RAC report from April.

The top overpayment issue differed for each RAC region, including:

• Renal and urinary tract disorders in Region A (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont, and Washington, D.C.);

• Extensive operating room procedure unrelated to principal diagnosis in Region B (Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio, and Wisconsin);

• Durable medical equipment, prosthetics, orthotics, and supplies provided during an inpatient stay in Region C (Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas, Virginia, West Virginia, and the U.S. Virgin Islands); and

• Minor surgery and other treatment billed as inpatient in Region D (Alaska, American Samoa, Arizona, California, Guam, Hawaii, Idaho, Iowa, Kansas, Missouri, Montana, Nebraska, Nevada, North Dakota, the Northern Marianas, Oregon, South Dakota, Utah, Washington, and Wyoming).