RAC collects $18.8 million from DME providers in FY2010

Recovery Audit Contractors (RACs) collected $18.8 million in Medicare overpayments for durable medical equipment during fiscal year 2010, according to the Centers for Medicare & Medicaid Services’ first annual report to Congress released Sept. 30.  That can be a lot of money for many providers, but it is a miniscule amount when compared with total spending by Medicare for DME.

RAC is a relatively new audit program which identifies and recovers improper payments from Medicare providers. It is one of four major audit programs for HME.

Overall in 2010, RAC collected $92.2 million from Medicare Part A, Part B and DME providers, according to the report. The largest category of overpayments was inpatient claims, totaling $41 million. That was followed by $18.8 for DME claims, $9 million for outpatient claims, $5 million for physician claims and $900,000 for nursing homes, home health agencies and others.

Of total DME collections, $6.1 million came from DME dispensed by physicians, and $12.8 million came from DME dispensed by suppliers, according to the report.

Total Medicare spending annually for DME is about $9 billion, or about 1.8 percent of total Medicare spending of more than $500 billion. That means the recovered amount of $18.8 million is about 0.2 percent of all of Medicare DME spending – roughly the same rate of RAC recovery for other areas of spending in the Medicare program.  
 

RAC is split into four geographic regions, each administered by its own contractor, and the report showed that an overwhelming majority of DME claims targeted for recovery came from Region D, which encompasses mostly states in the West. DME claim recovery in Region D totaled $14 million, or about 75 percent of all DME collections by RAC.

The three top issue codes identified by recovery audit in Region D were:

• DME-POS during inpatient stay; 22,248 claims totaling $6.6 million.
• Date of service after death; 13,874 claims totaling $1.5 million.
• Prosthetic billing; 2,134 claims totaling $1.3 million.

In Region A, which encompasses the Northeast, “multiple DME rentals per month” was No. 4 on top issue codes identified by recovery auditors, and was involved in 3,408 claims. And in Region C, the South, “DME claims billed during inpatient stay” was No. 2 on top issue codes, and involved 3,409 claims. 

During FY 2010, Medicare A, B and DME providers appealed 8,415 claims, or 5 percent of all claims collected. Of those appeals, providers received favorable responses for 3,902 claims, or 46 percent of appeals, the report said.
 

The report was required under the Patient Protection and Affordable Care Act of 2010. The act also will eventually expand the RAC program into Medicare Part C and Part D, and Medicaid.

The entire CMS report is available here (link to http://www.cms.gov/Recovery-Audit-Program/Downloads/FY2010ReportCongress.pdf).

(Dave Parks is editor of HomeCare magazine and HomeCare Monday. BNA Health Law Resource Center contributed to this report.)