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The auditors are charged with recovering Medicare reimbursements improperly paid due to error. The four RACs, which were awarded contracts in different regions of the United States, collected million that first year, a figure that rose to 1 million in 2011 and has exceeded billion in each subsequent year.

Nearly three years after the nationwide rollout of a controversial federal demonstration program that incentivizes private contractors to audit hospital billings on a contingency fee basis, the data are in.Many hospitals are fighting back and regaining ground, while others are losing millions of dollars.But even hospitals that have successfully challenged the Recovery Audit Contractors program agree it is flawed, unfair and costly.In 2010, the Centers for Medicare & Medicaid Services expanded the Recovery Audit Program from the three states where it was piloted.While auditors can challenge billings dating to three years earlier, hospitals only can appeal cases within one year.

Hospital coding experts and consultants also say the auditors do not interpret the standards clearly and are too quick to punish hospitals that don't return documentation or appeals on time.They say RACs are slow to uncover underpayments to hospitals and too quick to find overpayments.According to the American Hospital Association, two-thirds of the medical records reviewed by RACs contain no errors.The AHA's RACTrac survey also found that 40 percent of hospital claims denials are appealed and that hospitals prevail in those appeals 72 percent of the time.Hospitals contend that RACs are second-guessing physicians' medical judgments sometimes years after patients were treated and released.Among the charges against the program is that RACs challenge claims for legitimate services rendered, assuming many hospitals won't appeal the findings.