Skip to main content

How Proper Coding Helps Clinics Avoid RAC Audits

October 30, 2013

Learn how to avoid rac auditsYou’re no doubt aware that proper coding minimizes rejected claims and improves practice and clinic revenue. Are you also aware that accurate coding also helps you avoid troublesome and time consuming RAC audits from Medicare and Medicaid?

Although there are myths and a certain mystique associated with CMS RAC audits, most of these have some foundation in fact. Contrary to somewhat popular belief, RAC auditors do not reject every claim they review, neither do they “make up” their own audit rules, while disregarding CMS regulations, nor do they refuse to be candid about the claims they’re reviewing. These are but a few of the myths that have haunted RAC audits for some years.

However, there are rather simple precautions that clinics and practices can minimize the number of RAC audits they face, minimizing the probabilities of fines, penalties and staff time required by these examinations.

Avoiding Some RAC Audits

  • Understand CMS coding rules for midlevel providers (MLPs). Medicare, like other payers, have different coding rules for nurse practitioners and PAs. Reimbursement delays and more frequent RAC audits often result from incorrect coding for MLP services.
  • Conduct internal audits of your coding and billing staff. Performing your own surprise internal audits of your coding staff can identify problems before they become reimbursement or compliance issues that are costly to the clinic or practice in lost revenue.
  • Never assume your staff physicians or other personnel are thoroughly trained on CMS regulations. Many clinics and practices automatically assume that newly minted physicians and veteran coding personnel are “experts” in CMS coding regulations. Wrong. New physicians, fresh from performing double or triple shifts during residency, have had little time to learn coding details and nuances. Even seasoned coding personnel may have had little experience with Medicaid and Medicare billing during their otherwise impressive work history.

Download: RAC Audit Checklist – Simple Action Plan for RAC Audit Compliance

  • Conduct regular, remedial training for your coding staff. Regular remedial training and testing keeps coding staff up-to-date with CMS requirements, while also documenting evidence of your dedication to compliance with proper coding. This documentation should minimize many “red flags” that RAC auditors perceive about your coding and claims submission procedures.
  • Contract for periodic outside audits–at your expense–to offer evidence that your clinic or practice takes compliance seriously. This commitment delivers your clinic or practice at least two major benefits. First, you’ll have fewer rejected claims, as your outside auditors will identify inaccurate coding and billing, possibly noting any emerging patterns of repeat errors, costing the clinic or practice of earned income. Second, you will again have indisputable third-party evidence of your commitment to submit accurately-coded, legitimate claims to CMS, further enhancing your clinic’s credibility.

Compared to the cost in staff time, along with the potential for rejected claims (requiring you to reimburse CMS within 60 days), fines and penalties, implementing these procedures are a bargain. Since there is a natural adversarial relationship between your staff and RAC auditors, some of which comes from the aforementioned myths, taking these measures often improves the auditor/staff relationship, while minimizing the number and intensity of future RAC audits.


Image courtesy of

Get the Latest RCM News Delivered

Receive practical tips on medical billing and breaking news on RCM in your inbox.

Get in Touch