May 02, 2019

Recovery Audits: Improvements to Protect Taxpayer Dollars and put Patients over Paperwork

Seema Verma
Administrator, Centers for Medicare & Medicaid Services

Recovery Audits: Improvements to Protect Taxpayer Dollars and put Patients over Paperwork

Some argue the solution to our nation’s health care problems is a government-run health insurance program for everyone. While they may point to Medicare’s low administrative costs as a reason to expand the program, the reality is that these costs are low in part because we must target our program integrity efforts. Due to the size of the Medicare program – our systems process over one billion claims a year - we are able to review less than one percent of claims that Medicare receives each year, which means the Medicare program can be susceptible to more improper payments, fraud and abuse than in the private sector.

The Centers for Medicare and Medicaid Services (CMS) is taking action to strengthen Medicare and protect it for people that have paid into it their whole lives. Two of our top priorities at CMS are taking a strategic approach to protecting taxpayer dollars and reducing regulation to put patients over paperwork. Our work includes reducing erroneous and inappropriate payments and risks, and developing effective program integrity controls to ensure that every taxpayer dollar serves its intended purpose.

Improper payments are not necessarily measures of fraud, but instead are payments that did not meet statutory, regulatory, administrative, or other legally applicable requirements. Under this Administration, CMS has brought the rate for improper payments to its lowest point since 2010. But, more work is needed to achieve increased and consistent reductions to the improper payments rate in the future.

CMS uses several types of contractors to verify that Medicare Fee for Service (FFS) claims are paid based on Medicare requirements. One type of contractor is a Recovery Audit Contractor (RAC). The Medicare FFS RAC Program is one of many tools we use to prevent and reduce improper payments. RACs identify and correct overpayments made on claims for health care services provided to beneficiaries, identify underpayments to providers, and provide information that allows us to prevent future improper payments.

However, in the past there were numerous complaints about the RAC program. Providers found the audits time-consuming, necessitating high administrative expenses, and often requiring lengthy appeals. Thanks to recent efforts by this Administration, complaints about RACs have decreased significantly. Stakeholders have expressed surprise, and wondered what happened.

What happened is this: CMS listened to what providers were telling us and we made meaningful changes. That input informed our thinking as we re-examined all aspects of our RAC processes. We identified areas where we could reduce provider burden and appeals, and increase program transparency, while enhancing program oversight and effectiveness.

As a result of these efforts, we’ve reduced RAC-related provider burden to an all-time low, as evidenced by the significant decrease in the number of RAC-reviewed claim determinations that are appealed and the corresponding reduction in the appeals backlog.

And, even with these changes, the Medicare FFS Recovery Audit Program still continues to significantly reduce improper payments. In FY 2018, the program identified approximately $89 million in overpayments and recovered $73 million. Since its inception in 2009, the program has played a major role in reducing improper payments, recouping more than $10 billion for the Medicare program.

Here are some examples of the key improvements and enhancements we’ve made to the program:

Better Oversight of RACs

  • We are holding RACs accountable for performance by requiring them to maintain a 95% accuracy score. RACs that fail to maintain this rate will receive a progressive reduction in the number of claims they are allowed to review.
  • We also require RACs to maintain an overturn rate of less than 10%. Failure to maintain such a rate, will also result in a progressive reduction in the number of claims the RAC can review.
  • RACs will not receive a contingency fee until after the second level of appeal is exhausted. Previously, RACs were paid immediately upon denial and recoupment of the claim. This delay in payment helps assure providers that the RAC’s decision was correct before they are paid.

Reducing Provider Burden and Appeals

  • We are making RAC audits more fair to providers. Previously, RACs could select a certain type of claim to audit. Now, they must audit proportionately to the types of claims a provider submits.
  • We changed how we identify whom to audit. Instead of treating all providers the same, we conduct fewer audits for providers with low claims denial rates.
  • We gave providers more time to submit additional documentation before needing to repay a claim. This 30-day discussion period, after an improper payment is identified, means that providers do not have to choose between initiating a discussion and filing an appeal. CMS expects this will continue to reduce the number of appeals.

Increasing Program Transparency

  • We are regularly seeking public comment on newly proposed RAC areas for review, before the reviews begin. This allows providers to voice concerns regarding potentially unclear policies that will be part of the review. Posting these topics also allows providers to better prepare for RAC reviews before they begin.
  • We required RACs to enhance their provider portals to make it easier to understand the status of claims.

In addition to recouping improper payments, the FFS Recovery Audit Program helps us prevent future ones. For example, in FY 2018, we started using findings from the Medicare FFS RACs to implement local and/or national changes to prevent improper payments. By denying improperly billed services or by returning claims to the provider, providers can make corrections and resubmit the claim for payment.

CMS’ program integrity functions for Medicare, Medicaid, and the Exchanges help us hold the entire healthcare system accountable, protect beneficiaries from harm and safeguard taxpayer dollars to empower patients while minimizing unnecessary provider burden. CMS is focusing on results by ensuring that the right payments are made at the right time for the right beneficiary for covered, appropriate, and medically reasonable and necessary services in the Medicare program – while allowing providers to focus on their primary mission of improving patients’ health. The improvements outlined above have helped us make patient care, not paperwork compliance, the main focus of providers.

Our work to protect taxpayers and put patients over paperwork won’t stop with the RACs – stay tuned for more to come.

More information on the Medicare FFS Recovery Audit Program can be found at:


Get CMS news at, sign up for CMS news via email and follow CMS on Twitter CMS Administrator @SeemaCMS, @CMSgov, and @CMSgovPress.