Medicare Recovery Audit Contractor (RAC) Program

By: Meredith Miller
Published: Tuesday, October 02 2018
Last Updated: a month ago

With the sheer number of Americans enrolled in Medicare, it’s easy for claims and potential waste to get overlooked. Since the federal health insurance program is funded solely by taxpayers, it’s crucial that the program run as efficiently as possible, and all cases of fraud or mismanagement be investigated and resolved. In an effort to uphold the integrity of Medicare, the government uses Medicare recovery audit contractors (RAC) who ensure everything runs smoothly.

What Is Medicare RAC?

If you’re wondering what a Medicare RAC audit program is, here’s what you need to know. The simple answer is that Medicare recovery audit contractors are part of a program that has strict guidelines to crack down on overpayments and underpayments. If either of these is found, money will have to be paid to bring it to the amount it needs to be. This program really helps minimize waste, fraud, and abuse of the Medicare system.

The History Of The Program

The Medicare RAC program started in 2009 and since then it has returned over $10 billion in overpayments and over $800 million in underpayments. It was started to help cut down on the amount of abuse the Medicare system has. As time goes on, the rules and regulations keep on improving to make sure physicians aren't being falsely accused and Medicare is being used the way it's supposed to.

What Does A Recovery Audit Contractor Do?

Medical professionals might not even know what exactly a recovery audit contractor does, they just know that they enforce rules. Being a Medicare recovery audit contractor comes with a lot of responsibility. Here is a list of the things a recovery audit contractor needs to do in order to make sure the medical practice is within the requirements of the Medicare RAC program.

  • Rac contractors review claims once they move into the post-payment phase.
  • Rac contractors also have to use the same Medicare policies as carriers, FIs, and MACs.
  • Rac contractors have to review claims that happen AFTER October 1, 2007.
  • They have to have nurses, therapists, certified coders and a physician CMD on their staff.

Remember, a recovery audit contractor isn't out to get you or ruin your business. They're just trying to make sure you adhere to the general guidelines and standard practices of Medicare.

RAC Requirements

There are some pretty firm RAC requirements that are non-negotiable and have to be met. These requirements are listed below.

  • They have to employ a certain number of people in certain professions.
  • They have to have at least 95% accuracy.
  • If a claim gets overturned in an appeal, they have to pay physicians interest that has been calculated from the recoupment date.
  • They can only go back 3 years to recover monies.
  • They can only request 10 medical records per 45 day period.
  • They have to have a presence on the web so physicians can look up medical record review information.
  • They have to pay physicians back for mailing and postage for the medical records they send.
  • They can't get contingency fees until the second level of the appeal and they have to pay it back if they lose.
  • It's required to get an independent external validation process.
  • They have to offer a physician a chance to talk to the contractor medical director about any improper payments.

Can You Overturn An Audit

If you’ve been audited and don’t agree with the findings or results, there is something you can do about it. The RAC program makes appealing decisions a fairly simple process, but with that being said, starting the appeal process may not be as easy as getting your RAC audit overturned. There are 5 different levels to the appeals and each level has specific guidelines that need to be met.

Level 1: Redetermination

Once you get the determination letter, you have 120 days to file a written appeal. If this isn't done within 30 days, Medicare might go ahead and start the process of recoupment. The contractor will then have 60 days the investigate the determination to see if it's justified or not. If it's overturned, the contractor will include anything owed with the redetermination letter. If it's denied, you'll get an explanation letter.

Level 2: Reconsideration

Once your appeal has been denied, you have 180 days to file a request for reconsideration. This is sent to a Qualified Independent Contractor, who then has 60 days to come to a decision.

Level 3: OMHA

If the reconsideration is denied, you'll have requested a hearing within 60 days. Once you get to this level, you'll have to start going to court dates. The appeal must have a minimum amount of $120 and a written decision will be given within 90 days.

Level 4: Medicare Appeals Council

If it's still denied, you'll be able to go to the council within 60 days and they'll have a decision to you within another 60 days.

Level 5: Federal District Court

The final level makes it so you can file an actual lawsuit within 60 days. In order for this to go through, the appeal has to have a minimum of $1,260. If it's denied at this level, then you're out of options.