RAC Program

Before understanding how a Medicare audit works, we should review the RAC program – where did it come from? How did we get here?

The Tax Relief and Health Care Act of 2006 required a national RAC program for 2010. Whether or not you intended to overbill, the red flags are raised when health care providers submit claims that are not aligned with CMS coding policy.

Here is the kicker… RAC auditors are subcontracted by the government. Being independent, they are supposed to offer up the most fair audit techniques and outcomes. However, the nuance is that they are compensated based on how much overbilling is uncovered. How does this all make sense? Just like a government auditor, the RAC auditor’s job is to uncover unjustified billing. Nonetheless, there is an obvious conflict of interest where a person is compensated based on their ability to “find” more money. For this reason, we highly disagree with the RAC audit procedure and their intentions.

Per RAC, here is their mission:

• The RACs detect and correct past improper payments so that CMS and Carriers, FIs, and MACs can implement actions that will prevent future improper payments:

• Providers can avoid submitting claims that do not comply with Medicare rules

• CMS can lower its error rate

• Taxpayers and future Medicare beneficiaries are protected

Essentially, this is a system that is set up to provide protection for the government from medical provider over billing. We work to ensure that the “protection,” is not a one way system where the government simply takes back payments at their subjective discretion.

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