Medicare Audit Recovery Program Has Recovered $700M In Overpayments To Providers

Private auditors over about three years have recovered almost $700 million in Medicare overpayments to hospitals and other health care providers in six states as part of a recovery audit contractor program, the Wall Street Journal reports. Under the program, CMS pays auditors a portion of the amount of improper Medicare payments that they identify.

Auditors reviewed $317 billion in Medicare claims and found $1.03 billion in improper payments, most of which involved claims filed in New York, California and Florida. Medicare overpayments account for $992.7 million of the improper payments, and underpayments accounted for $38 million. The cost of the program amounted to about 20 cents per dollar, with $187.2 million paid to auditors. Providers appealed 14% of the alleged Medicare overpayments and successfully challenged about 4.6% of the overpayments.

Tim Hill, CFO and director of the Office of Financial Management at CMS, said, “All in all, we’re very happy with the results,” adding, “It returned a lot of money to the trust fund, particularly when you think that we’re talking about three states.”

The program has “drawn fire” from providers, “who call it overly aggressive and too confrontational,” the Journal reports. However, CMS has begun to expand the program nationwide. CMS plans to revise the program to require auditors to use clinically trained personnel to ensure that they evaluate medical necessity consistently with other agency operations and to communicate with providers about audits in more detail. In addition, CMS plans to add staff to oversee the program and allow providers to track audits (Francis, Wall Street Journal, 7/14).

Reprinted with kind permission from You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at The Kaiser Daily Health Policy Report is published for, a free service of The Henry J. Kaiser Family Foundation.

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