CMS Identifies $371.5 Million in Overpayments and Underpayments

From Vinson Elkins (

On February 28, 2008, the Centers for Medicare and Medicaid Services (CMS) announced that, for fiscal year 2007, $371.5 million in improper Medicare payments has been collected from or repaid to health care providers and suppliers through a demonstration program using recovery audit contractors (RACs) in California, Florida and New York. Overpayments to providers constituted 96% of the identified payment errors, while underpayments constituted 4%. In addition, the vast majority of payment errors were on claims for hospital inpatient services. Typical errors caught by the RACs include billing for the same service more than once, incorrect coding, double payment for duplicate claims, or payments based on outdated fee schedules. The RAC demonstration program was created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), is mandated as a permanent part of Medicare by the Tax Relief and Healthcare Act of 2006, and will be implemented nationally before January 1, 2010. A more detailed press release on the recoveries is available at Reporter, Leah Stewart, Austin, 512.542.8473 or

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