What Health Care Providers Need to Know about RAC

Recovery Audit Contractors will pursue Medicare claims by auditing for overpayments and underpayments under Part A or B of the title XVIII of the Social Security Act. Health Care Providers will be affected because recently Medicare has contracted for 2009 and beyond to audit every provider in the nation and Puerto Rico who files with Medicare. It is expected to be in place by 2010 in all 50 states and Puerto Rico on a permanent basis. Based on findings, if compliance to Medicare billing rules is not up to standard, penalties may be assessed including fines and in severe cases, the loss of Medicare billing privileges.

What should providers do?
Health care providers would be wise to ensure their offices are in compliance because Medicare will not provide any guidance to the physician or provider of care outside of giving them written guidelines. RAC company’s contracts are paid on contingency based fee which means they actually have every incentive to find errors. It should be noted each RAC’s contingency fee is established during contract negotiations with CMS and varies for each RAC.

Region A: 12.45%
Region B: 12.50%
Region C: 9.00%
Region D: 9.49%

Internal changes need to be established to monitor documentation and coding for compliance as well as establishing a framework to track RAC requests. These are not new requirements to providers. The provider application and contract clearly states that it is the sole responsibility of the Physician to follow all documentation rules and regulation, coding and billing rules 100% of the time. Offices setting up compliance guidelines should appoint someone who will be responsible for monitoring compliance within the practice.

Is there a limit to what records RAC’s will audit?

Yes there is a medical records limit as to what RAC will audit.

Physicians (by NPI)
• Solo Practitioner
Limit = 10 medical records/45 days
• Partnership of 2-5 individuals
Limit = 20 medical records/45 days

• Group of 6-15 individuals
Limit = 30 medical records/45 days

• Large Group (16+ individuals)
Limit = 50 medical records/45 days


What will RAC Audits do for the Provider?

Under the program, RAC audits will focus on CMS established payment criteria and consist of both automated claims history reviews from the CMS database as well as complex clinical reviews of patient medical records. Specific areas of concentration include "not medically necessary services" (or those not meeting the established CMS clinical payment criteria), non-covered services, incorrectly coded claims, duplicate services and incorrect payment amounts.

What is involved in The RAC Claims Audit Process?

The Process consists of six phases.
1. Data Screening & Claim Selection
II. Medical Record Request
III. Record Review and Status Determination
IV. Post Review Notification
V. Overpayment Recoupment
VI. Post Determination- Other Provider Options and Data Tracking

Does the RAC program cover Medicare Replacement policies?

No the RAC program does not detect or correct payments for Medicare Advantage or the Medicare prescription drug benefit.

What happens after a RAC audit?

In those cases of overpayments the physicians may choose to send a rebuttal of the findings directly to the RAC within 15 days of receiving the RAC’s letter identifying an overpayment. However, that this does not stop the clock on the 120 day time period during which you can request a redetermination (first level appeal) from your Medicare contractor or on the interest accrued when money is not refunded within 30 days of request. If the RAC discovers that an underpayment has been made to the provider then the RACs will inform the carrier or intermediary who will proceed with the claim adjustment and payment to the provider.

When does all this begin?

Implementation will take place on a rolling basis in 3 phases which began 10/1/08 The schedule for the program rollout can be found at http://www.cms.hhs.gov/rac


Will your practice be ready?