Why Plan Sponsors Must Retain Full Audit Rights

Plan Sponsors of self-funded medical plans should insist on full audit rights. Unfortunately, PPO contracts restrict, or even eliminate a plan sponsor’s right to audit. See PPO Letter

Healthcare recovery auditors (RACs) collected $2.29 billion in overpayments from providers in fiscal year 2012, a record-high level that’s almost three times more than last year’s $797.4 million recoupment of overpayments, according tothe latest figures from the Centers for Medicare & Medicaid Services.

In the fourth quarter, RACs collected $648 million in overpayments. While that’s a slight drop from the $657.2 million recovered during the third quarter, it’s still well above the $588.4 million collected during the second quarter.

RACs this year also gave back $109.4 million in underpayments to providers, with $46.5 million returned in the fourth quarter.

Thanks to billing issues with medical necessity of cardiovascular procedures, CMS corrected $2.4 billion in total Medicare payments this year.

Currently, 75 percent of RAC judgments against providers get overturned when they are appealed. With such a high overturn rate, RACs could face some hefty fines if a pending bill gets signed into law, FierceHealthFinance previously reported. The bill would affix financial penalties on every judgment against a provider that is overturned.

Meanwhile, Medicare administrative contractors (MAC) have been identifying and correcting inappropriate payments in California. For example, University of California, Irvine, Medical Center and Arroyo Grande Community Hospital both incorrectly billed Medicare for injections of selected drugs, for which MACs recouped $50,073 and $51,562 in overpayments, respectively.