Private Medicare Auditors Turn Up Overbilling -- and Controversy

Private auditors hired by Medicare have been scouring hospital and doctor records for the last few years in search of overbilling, waste and fraud. Paid on a contingency basis, which gives them a natural incentive to be aggressive, such "recovery audit contractors" identified more than $1 billion in improper Medicare billings in six states between 2005 and March 2008.

Hospitals are already complaining about the hassle of dealing with RACs, and consultants have stepped up to offer administrators crash courses in preparing for and dealing with RAC audits. Critics have other problems, too -- among them the fact that overhead costs consumed almost 20 percent of the recovered sums, much of that reflecting contingency payments. Several influential congressmen have asked the Government Accountability Office to review the RAC program (PDF link).

(For those interested in more detail, Medicare also offers a detailed report and background materials on the RAC program.)

Of course, Medicare seems to have no shortage of billing controversies to clear up. A separate congressional investigation recently found that since 2000, the agency has paid almost $100 million in claims to doctors who just happened to be dead at the time.

(Hat tip: WSJ Health Blog)