Medicare Recovery Audit Contractors (RAC)
Congress created the Medicare Recovery Audit Contractor (RAC) program to help identify improper Medicare payments. RAC auditors are private contractors paid a commission by the government to:
- Identify overpayments or underpayments
- Recoup overpayments or return underpayments
However, bounty-hunter-like incentives cause physician practices undue hardship, expense, and time away from patients. The American Medical Association (AMA) strives to ensure that CMS implements the RAC program in an equitable manner.
AMA-Advocated RAC Improvements
The AMA has successfully advocated for the following improvements to the RAC program:
- RACs are required to maintain an accuracy rate of at least 95%.
- Failure to maintain this accuracy rate results in a progressive reduction of the RACs’ ability to request medical records from physicians.
- If claims are overturned on appeal, RACs must pay physicians interest calculated from the date of recoupment.
- CMS shortened the timeframe a RAC can go back and recover monies from 4 years to 3.
- RACs must have certified coders.
- RACs can request up to 10 medical records per single practitioner within a 45-day period, but current advocacy seeks to lower the amount to no more than 3 within a 45-day period.
- Medical record request limits will be adjusted:
- CMS will place a lower limit on the number of medical records a RAC may request from physicians with a low denial rate.
- RACs may request more records from physicians with higher denial rates.
- As a physician’s denial rate decreases, record request limits are reduced, rewarding compliance with Medicare rules.
- RACs are required to have a physician contractor medical director
- They are encouraged to have a panel of specialists available for consultation.
- RACs must maintain a web presence where physicians can look up the status of audits involving medical record reviews.
- RACs must reimburse physicians for the cost of printing and mailing medical records.
- Review topics (referred to as vulnerabilities) must be approved by CMS and posted on each RAC’s respective website.
- Proposed review topics are posted on the CMS website for 30 days prior to approval, allowing physician groups to weigh in.
- Contingency fees policies:
- RACs will not receive contingency fees until after the second level of appeal.
- Contingency fees must be repaid if RACs ultimately lose on appeal.
- Independent external validation is now mandatory to ensure audit areas are appropriate.
- RACs must offer physicians the opportunity to discuss improper payment identifications with the contractor medical director.
Medicare RAC Program Audit
The RAC audit system has created both oversight and burden for physicians. The AMA’s active role ensures these audits become fairer, more accurate, and less disruptive to the practice of medicine. Physicians are encouraged to stay informed about their audit status, appeal options, and record-keeping requirements to mitigate risks and minimize disruptions to patient care.
Frequently Asked Questions
What is the Medicare RAC program and why was it created?
The Medicare Recovery Audit Contractor (RAC) program was created by Congress to identify and correct improper Medicare payments, both overpayments and underpayments, by utilizing private contractors paid a commission based on the funds they recover or return.
How are RACs incentivized and why is this controversial?
RACs are paid contingency fees based on the amount of overpayments they identify and recoup. This bounty-hunter-like model can result in aggressive auditing, creating burdens for physicians through unnecessary documentation demands and financial pressure.
What improvements has the AMA helped implement in the RAC program?
The AMA has advocated for several improvements, such as requiring RACs to maintain a 95% accuracy rate, shortening the audit look-back period from 4 years to 3, mandating certified coders, limiting medical record requests, and requiring RACs to pay interest on overturned claims.
How does the RAC program reward compliant physicians?
Physicians with lower denial rates face fewer medical record requests from RACs. As denial rates decrease, so do the record request limits, thereby incentivizing accurate billing and documentation.
What should physicians do to manage RAC audits effectively?
Physicians should stay informed about audit procedures, understand appeal options, keep meticulous records, and monitor audit status through RAC web portals. Proactive compliance and awareness can reduce disruptions and improve outcomes during audits.