There has been an abundance of improper Medicare and Medicaid payments made. Recovery Audit Contractors (RAC) are retained by the US Government to identify any under payments or overpayments made to health care providers. Another responsibility they have is to make payment adjustments in order to correct identified errors.
In 2007 nearly $11 billion improper Medicare payments were reported. In addition many Medicare claims were non-compliant in terms of billing, coverage, coding or payment rules. Because of the huge number of inconsistencies, the US Congress created the RAC program. RAC contractors receive an initial fixed payment for each occurrence of improper payment. In addition they receive a percentage of recovered funds. Not surprisingly, the AMA likens RAC to bounty hunters and deeply disapproves of this organization.
RAC will not review claims reviewed by other entities. 4 regions have been created covering the US and each has one RAC contractor.
How Do Mistakes Happen?
According to the American College of Emergency Physicians overpayments can occur when health care providers submit claims that fail to meet coding or medical policies. Underpayments can occur as well. These happen when health care providers submit claims for a simple procedure when the actual procedure that was performed was more complex. Types of providers eligible for review include any facility that submits Medicare claims. Included are physicians, hospitals, nursing homes, medical equipment suppliers and home health agencies.
How Far Back Can a Medicare RAC Audit Go? The initial Medicare look back audit period was four years, but vehement objection from the AMA reduced this period to 3 years.
Expansion of RAC and Hospitals
At the close of 2010 the RAC Program was expanded to include Medicare and Medicaid parts C and D. To be able to pass a look back audit hospitals should have a RAC team in place. This team should monitor relevant websites periodically for updates. Hospitals should also have a process for RAC appeals. Creating a central location for medical requests is advisable as well.
RAC Truth Vs. Fiction
CMS provides the following RAC Audit myths you should know about the RAC audit program.
Download: RAC Audit Checklist – Simple Action Plan for RAC Audit Compliance
Factors that are significant in terms of review are:
CMS Medicare RAC Appeals Process
Physicians can appeal a RAC determination by following the appeals process documented below.
What Are RAC Program Benefits?
The RAC program greatly enhances the accuracy of Medicare and Medicaid reporting. It makes sense for work done under government programs and guidelines to be audited for accuracy. This program has already reaped many tangible results. AHA.org indicates that in May 1, 2012 nationwide audit statistics showed a substantial 33% in overpayments.