{
  "id": "R40592",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "R40592",
  "active": false,
  "source": "EveryCRSReport.com",
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      "source": "EveryCRSReport.com",
      "id": 348943,
      "date": "2009-05-21",
      "retrieved": "2016-04-07T02:29:22.154937",
      "title": "Medicare\u2019s Recovery Audit Contractor (RAC) Program: Background and Issues",
      "summary": "Recovery Audit Contractors, or RACs, are private organizations that contract with the Centers for Medicare and Medicaid Services (CMS) to identify and collect improper payments made in Medicare\u2019s fee-for-service (FFS) program. CMS projects improper FFS payments to amount to approximately $10.4 billion or 3.6% of all paid Medicare claims in 2008. Congress originally required the Secretary of the Department of Health and Human Services to conduct a three-year demonstration program using RACs in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173). In December 2006, Congress passed the Tax Relief and Health Care Act of 2006 (TRHCA, P.L. 109-432), which made the program permanent and mandated the expansion of RACs nationwide by 2010. CMS began the national rollout of the permanent program in 19 states in March 2009.\nCMS initiated the RAC demonstration in March 2005 in three states\u2014California, Florida, and New York. After a preliminary status report revealed that the three participating RACs had returned $54.1 million to the Medicare Trust Funds during its first year of operation, CMS expanded the demonstration to two additional states\u2014Massachusetts and South Carolina. The agency concluded the pilot in March 2008. According to the final evaluation of the demonstration, the RACs returned $693.6 million in overpayments to the Medicare Trust Funds over the course of three years. \nThroughout the demonstration, CMS continuously highlighted the success of the RAC initiative in protecting the fiscal integrity of Medicare. However, the demonstration and subsequent permanent program have raised concerns among policymakers and industry groups because Medicare pays RACs differently than it pays other administrative contractors. Historically, Medicare\u2019s administrative contractors have been paid a fixed annual budget for a defined scope of work. In contrast, Congress mandated that CMS pay RACs using contingency fees. A contingency fee is a negotiated payment, typically a percentage, for every overpayment recovered. Under a contingency fee payment system, contractors receive no additional administrative funding. This type of compensation has been criticized for incentivizing RACs to aggressively audit and deny provider claims. \nThis report provides an overview of the RAC program along with a brief history of improper payments in Medicare. A description of the medical review processes used by RACs and how it compares with other Medicare administrative contractors is also presented. The report concludes with a discussion of current issues. This report will be updated as needed.",
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      "typeId": "REPORTS",
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}