Understanding Medicare RAC Audits: What You Need to Know

Medicare's Recovery Audit Contractor (RAC) program works to identify improper Medicare payments. Between 2005 and 2008 it ran as a demonstration program. However, the Tax Relief and Health Care Act of 2006 mandated that it become permanent in all 50 states by 2010. In July 2008, the Centers for Medicare &Medicaid Services (CMS) reported that the RACs corrected more than $1.03 billion in improper Medicare payments.

Review Process

• There are two types of review. An automated review does not require medical records. Instead, RACs look at provider claims for hospital inpatient and outpatient services, skilled nursing facility services, physician, ambulance and laboratory services and durable medical equipment. A complex review looks at medical records, as well. RACs are allowed to look back three years from the date a claim was paid, but they can't review claims paid before October 1, 2007, according to The Centers for Medicare &Medicaid Services.

Options

• Providers are given a chance to discuss improper payments with RAC, when they are discovered. If a provider agrees with the finding, he can pay by check, allow money to be recouped from future payments or ask for a payment plan. If he disagrees with the finding, he can file an appeal within 120 days.

Additional Info

• RACs must employ a staff that includes nurses, therapists, certified coders and a certified medical director physician. RACs receive a percentage of the improper over- or underpayment that they collect from providers. There are four RACs. Each one is responsible for a quarter of the country, according to The Centers for Medicare &Medicaid Services.