What is the RAC Program?
Created through the Medicare Modernization Act of 2003 (MMA) and Tax Relief and Health Care Act of 2006, the Recovery Audit Contractor (RAC) program was designed to identify and recover improper Medicare payments paid to healthcare providers under fee-for-service (FFS) Medicare plans.
Improper payments may be:
- Overpayments – when healthcare providers submit claims that do not meet CMS coding or medical necessity policies
- Underpayments – when healthcare providers submit claims for a simple procedure but the medical record reveals a much more complicated procedure was performed
Who Are the RAC Contractors?
The country has been divided into 4 regions that are each awarded to a contractor. Based on the overpayments or underpayments that are identified, the RACs are paid on a contingency fee basis.
What does a Recovery Audit Contractor (RAC) do?
Each RAC identifies improper payments made on claims of healthcare services provided to Medicare beneficiaries through their own proprietary software and interpretation of Medicare rules and regulations. RACs generally focus auditing efforts on companies and individuals with higher billings for Medicare services than the majority of providers in their community. RACs use their proprietary software to determine if there is a possibility that the claim contains an error and then requests medical records from the provider to determine whether overpayments or underpayments have occurred, also known as Complex Review.
When will payments be deemed improper?
- Medically unnecessary services
- Incorrectly coded services
- Failure to submit correct documentation
- Duplicate Claims
- Other errors
The attorneys at Nicholson & Eastin, LLP represent and defend providers and suppliers in all types of Medicare, Medicaid, and other third-party payer audits, appeals, and controversies. We have the knowledge and experience to assist providers and suppliers in responding to audit requests, as well as to successfully appeal any improperly denied claims. Please do not hesitate to contact us to discuss your particular situation.
What Types of Audits are Conducted by RACs?
The Recovery Audit Contractor (RAC) program conducts various types of audits to identify and recover improper Medicare payments. The audits primarily focus on identifying overpayments and underpayments made to healthcare providers under fee-for-service (FFS) Medicare plans. The audits conducted by RACs include:
- Prepayment Audits: These audits occur before Medicare payments are made to providers. RACs review claims before they are processed to identify and prevent improper payments.
- Postpayment Audits: RACs conduct audits after payments have been made to providers. They review the claims retrospectively to identify any overpayments or underpayments.
- Automated Audits: RACs use automated processes and software to analyze claims data and identify potential payment discrepancies.
- Complex Review Audits: These audits involve a detailed review of medical records to ensure that the billed services align with the medical necessity and documentation requirements.
How Will I Know if I am the Subject of a RAC Audit?
If you are a healthcare provider and subject to a RAC audit, you will typically receive a notification from the RAC contractor. The notification will outline the audit process, the reason for the audit, and the specific claims or areas under review. It’s crucial to pay close attention to any communication from RACs and take prompt action to cooperate with the audit.
Upon notification, it’s advisable to seek professional assistance from legal experts like Nicholson & Eastin, LLP. Our team specializes in representing and defending providers and suppliers facing Medicare, Medicaid, and third-party payer audits. We can guide you through the audit process, ensuring compliance and protecting your rights.
For personalized support and guidance during a RAC audit, please contact Nicholson & Eastin.
Contact Nicholson & Eastin
For comprehensive legal guidance and representation in healthcare payment disputes, claims processing, or navigating the complexities of the RAC program, reach out to Nicholson & Eastin, LLP. Our experienced team is dedicated to providing tailored solutions that protect your rights and interests. Don’t hesitate to contact us for a consultation and take the first step toward resolving your healthcare-related legal matters.