Newsletter Signup

“Chart auditing should be performed quarterly at every medical practice ”
We understand the importance of effective medical chart transcription and how developing a practical audit program can impact your practice.

Recovery Audit Contractors - RAC Audits

When a letter from your carrier arrives telling you that you are going to be audited, will you be ready?

You have been hearing the word RAC! Do you know what it stands for?
RAC stands for “Recovery Audit Contractors.” These contractors are hired by the Centers for Medicare & Medicaid Services (CMS). Their purpose is to audit and recover dollars to put back into the Medicare Trust Fund. These contractors have a huge incentive as they are paid on contingency (what they recover) on a percentage basis, so you can be sure they will be aggressive in their audits. Any overpayments found by the RACs will need to be reimbursed to Medicare, which can collect their reimbursement from any future claims checks owed to you.
Why is a RAC Audit of importance to you?

The goal of these audits is to identify and recover improper payments made on claims for healthcare services provided to Medicare beneficiaries. These may be either overpayments or underpayments.

CMS engaged in a pilot demonstration program for three years. During this pilot program, RAC identified over $900 million in overpayments being returned to Medicare, as well as $38 million in underpayments. The states that were chosen for this pilot program were California, Florida, New York, Massachusetts, South Carolina and Arizona. Under this demonstration program, the RACS were able to recover 95% of the claims they audited.

Since this pilot program was so successful, CMS is now implementing RAC audits nationwide. All providers including hospitals and physicians could be subject to a RAC audit. Anyone who files claims with Medicare will be audited, to start no later than January of 2010. This includes physicians, hospitals, home health agencies, and Durable Medical Equipment providers.

Which payments are considered “Improper Payments” that will be subject to RAC review?
RACs may attempt to identify improper payments resulting from:
  • Incorrect Payment Amounts
  • Non-covered Services (Including Services That are Not Reasonably Necessary)
  • Incorrectly Coded Services
  • Duplicate Services
It is important for you to understand that for purposes of the RAC program, an "improper payment" will be an overpayment or underpayment. Situations that may not be considered an improper payment are situations where a provider submits a claim with an incorrect code, but the mistake does not change the payment amount.
What do we recommend?

We recommend that you prepare your practice for the impending CMS RAC (Recovery Audit Contract). By auditing your practice in advance, you can identify improper billing and coding and take necessary corrective actions prior to the RAC audit. This process will help you save both time and money. You may even find areas in which you are being under reimbursed as well. If you have identified that you have been underpaid due to incorrect coding then you may have the opportunity to collect that amount.

At HealthCare Management Solutions we can provide you with a base line audit of your practices billing and coding. Our certified coders have extensive experience with government audits. Once we have received all of your information and the audit is performed, we will deliver a report to you approximately one week later. The results of that report will be reviewed with you. We will help identify and make suggestions in areas for improvement. This valuable information may be used to make any changes in your current practice.

How can providers prepare for the RAC program's nationwide implementation?
CMS recommends a number of activities that providers can undertake to prepare for the implementation of the nationwide RAC program, including:
  • Examine the RAC demonstration and CMS documentation on the RAC program to identify possible target areas
  • Educate organizational leadership, compliance committee and functions, and possible targeted service lines about the RAC program
  • Proactively audit or review perceived vulnerabilities and take corrective actions
  • Develop a plan and internal processes to respond to RAC medical record requests, reviews and determinations
  • Know how to navigate the Medicare appeals process (and the possible arguments and defenses to RAC determinations)

Recovery Audit Contractor (RAC) Frequently Asked Questions

Our company has been using HealthCare Management Solutions for over a year. We are a successful multi specialty practice that has recently incorporated neurology, intensivist, psychiatry, urology, general surgery, and neurosurgery. These additions to our practice occurred without an increase in denials and days in A/R.
Jill Hall - Director of Business Services @ Northeast Georgia Physicians Group
Copyright © 2018 - Healthcare Management Solutions, LLC.
HealthCare Management Solutions, LLC.
4452 Congressional Drive
Jacksonville, FL 32246