Recovery Audit Contractor (RAC)

Created through the Medicare Modernization Act of 2003 (MMA) and Tax Relief and Health Care Act of 2006, the Recovery Audit Contractor (RAC) program was designed to identify and recover improper Medicare payments paid to healthcare providers under fee-for-service (FFS) Medicare plans.

Improper payments may be:

  • Overpayments – when healthcare providers submit claims that do not meet CMS coding or medical necessity policies
  • Underpayments – when healthcare providers submit claims for a simple procedure but the medical record reveals a much more complicated procedure was performed

The country has been divided into 4 regions that are each awarded to a contractor. Based on the overpayments or underpayments that are identified, the RACs are paid on a contingency fee basis.

Each RAC identifies improper payments made on claims of healthcare services provided to Medicare beneficiaries through their own proprietary software and interpretation of Medicare rules and regulations. RACs generally focus auditing efforts on companies and individuals with higher billings for Medicare services than the majority of providers in their community. RACs use their proprietary software to determine if there is a possibility that the claim contains an error and then requests medical records from the provider to determine whether overpayments or underpayments have occurred, also known as Complex Review.

When will payments be deemed improper?

  •      Medically unnecessary services
  •      Incorrectly coded services
  •      Failure to submit correct documentation
  •      Duplicate Claims
  •      Other errors

The attorneys at Nicholson & Eastin, LLP represent and defend providers and suppliers in all types of Medicare, Medicaid, and other third-party payer audits, appeals, and controversies. We have the knowledge and experience to assist providers and suppliers in responding to audit requests, as well as to successfully appeal any improperly denied claims. Please do not hesitate to contact us to discuss your particular situation.