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Part 306 of the Medicare Prescription Drug, Enchancment and Modernization Act of 2003 (MMA), directed the Department of Health and Human Providers (HHS) to conduct a three-year demonstration program using RACs. The demonstration began in 2005 within the three states with the best Medicare expenditures: California, Florida and New York. The aim of the demonstration program was to determine whether or not the usage of RACs can be a cheap strategy to determine and proper improper payments in the Medicare FFS program. The RAC demonstration program proved extremely financially successful from the viewpoint of the CMS. Actually, in fiscal year (FY) 2007 alone, the RACs recognized and picked up $357.2 million in overpayments, and repaid just $14.3 million in recognized underpayments to Medicare suppliers and suppliers. Based upon data compiled by CMS, the RAC demonstration program price only 22 cents for each greenback returned to the Medicare Trust Funds.
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