For those who are not yet familiar with the Recovery Audit Contractor (RAC) program, it is federally mandated program designed to detect and correct past improper payments made under Medicare. CMS has identified four regions and has contracted with four RACs to perform claims and medical record audits in these regions. All four RACs have received claims data from CMS and are currently reviewing the data from all states and for all provider types to identify improper payments.

This means that all providers in all states should expect that the claims they have submitted to Medicare are being reviewed and should know what to expect if the RAC determines that improper payments have been made to them.

So, if you are not familiar with the RACs and RAC audits, now is the time to get the information you need. It is particularly important for those providers and provider types who have been specifically targeted by the RACs. Targeted provider types include:

• Inpatient hospital
• Outpatient hospital
• Ambulance
• DME providers
• Physician groups

RAC Audit Process

RACs review claims on a post-payment basis. You might be thinking that if a claim has passed all the Medicare claims edits and payment was received, that the claim was properly screened and paid. However, this is not necessarily the case. Claims may be improperly paid even though they have cleared the Medicare claims system for many reasons including:

• Claims editing errors
• Failure to properly interpret and apply National Coverage Determinations (NCDs), Local Coverage Determinations (LCDs), and Medicare Manual Provisions to the claims adjudication process
• Coding errors
• Medical necessity errors

The RACs identify areas of focus using

• Data mining techniques
• Office of Inspector General (OIG) and Government Accountability Office (GAO) reports
• RAC staff knowledge and expertise related to Medicare, claims adjudication, coding, medical necessity, and other areas

Types of Reviews

There are two types of reviews, automated and complex.

Automated reviews are the most common type of review performed. They are performed using claims data analysis to identify improper payments. The medical record is not reviewed as this type of error is a claims processing error. When errors are found by automated review the RAC contacts the provider directly and requests a return of any overpayment or issues a check for any underpayments.

Complex reviews are performed using medical records to further analyze the claim. These types of reviews are performed to identify any discrepancies between the medical record documentation and the claim.

Steps You Should Take to Be Prepared in the Event of a RAC Audit

• Become familiar with the CMS RAC webpages

• Review the CMS RAC 101 slide presentation if you did not attend a RAC outreach meeting or participate in a CMS RAC conference call and/or view the YouTube presentation

• Visit the RAC website for your region

• Review the Issues or Issues Under Review page on your RAC website to determine if any issues under review in your region relate to your practice

• Check the Issues or Issues Under Review page frequently to identify any new issues that may relate to your practice

• Become familiar with the RAC Demand Letters and Documentation Request Letters so that you will be able to immediately identify them and take appropriate actions

• Should you receive a Demand Letter follow the processes and procedures outlined by CMS and the RACs to repay or appeal any requests for repayment of overpayments

• Should you receive a Documentation Request Letter follow the processes and procedures for submitting the necessary documentation

Summary

The RACs are here to stay. There is a good chance that you will be audited at some point in time. So be prepared by following the steps above.

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