CMS has released updated appeals data for claims reviewed by Recovery Audit Contractors during fiscal year (FY) 2011. Recovery audit contractors (RACs) are paid on a contingency fee basis for each identified improper payment. Fees paid to a RAC are retracted in cases where a denial is later overturned upon appeal.

In FY 2011, RACs identified 903,372 overpayments. Less than 7% of those overpayments (56,620) were appealed at any level. Of those claims appealed, over 43% (24,548) resulted in a favorable decision, and a total of $37.9-million was returned to providers. Automated audits accounted for the majority of overturned overpayment determinations. However, appealed complex reviews resulted in the largest dollar amounts being returned to providers.

At the individual level, Part B providers had the highest number of determined overpayments in FY 2011 with 410,208 claims denied. DME providers came in second with 295,425 denied claims, and audits of Part A providers resulted in 197,730 claim denials. DME providers submitted the lowest percentage of appeals compared to other Part A and Part B providers, but those who did appeal experienced a moderate level of success:

• Part B providers appealed 4.9% of denials with a 60% success rate,
• DME providers appealed 3.1% of denials with a 43% success rate, and
• Part A providers appealed 13.7% of denials with a 23% success rate.

Bottom line, if you believe a claim was denied in error, take advantage of your appeal rights! There are no fees to submit an appeal, and appealing denials does not increase your risk for future audits.