It’s time to read up on the RAC

Okay, if you haven’t started getting serious about educating yourself about the Recovery Audit Contractor program, it’s about time you should.

RACs are third parties hired by the Centers for Medicare and Medicaid Services to ensure that physicians are being paid correctly for Medicare Part A and B services. They identify all “improper payments,” whether the physician received too much or too little, and in return receive a share of the booty—I mean, spoils—I mean, identified payments. [Don’t mind me, it’s Friday.]

CMS released an update in late April that showed that in its first 18 months, the permanent RAC program had identified a total of $365.8 million in total improper payments—$312.2 million in overpayments and $52.6 million in underpayments. The agency attributed the four big reasons for improper payments to incorrect coding and billing for bundled services.

The three-year demonstration was wildly successful, too, with more than $900 million in overpayments collected from physicians and suppliers from six states (California, Florida, New York, Massachusetts, South Carolina, and Arizona) and less than $38 million in underpayments repaid.

RACs came to Texas in March 2009 and Connolly Healthcare won the contract for our region, Region C.

Bradley Reiner, TAFP’s practice management consultant, recommends that physicians be involved in the billing process, and implement a compliance plan so employees are aware of potential errors and how to fix them before they become big problems.

The compliance plan is detailed in the second part of an article Bradley wrote for Texas Family Physician in fall 2010. “Ready or not, Recovery Audit Contractors are coming” explains how the program works, how to minimize the risk of being audited, and what to do if you are. Bradley wrote another article in the winter 2009 issue, “Are you ready for the RAC?,” that details the demonstration project.

Both of these will help get you thinking about the RACs so you’ll be prepared if they knock on your door (rather, send a letter). TAFP members can also contact Bradley by phone at (512) 858-1570, or by e-mail at for a consultation and discounted services.

The take-away message is that you can’t ignore them. As Bradley says, “If they continue to be successful there is no doubt everyone will have a RAC audit sooner or later. In almost every practice a RAC can find some billing, coding, or documentation issue during any given audit … . The rules are too complex and differ from payer to payer.”


2 Responses to “It’s time to read up on the RAC”

  • Lloyd Van Winkle,MD:

    Strangely, there seems to be no effort from CMMS to go out and see how many doc’s are under paid for not coding as highly as they should. They under code for lots of reasons, like lack of understanding, or fear of audit, etc. Why is CMMS not sending out cadres of under coding auditors to insure higher/fairer payments to doctor? Any school boy in PE class knew it was embarrassing and painful to get “RAC’d”, my guess it still is.

  • kalfano:

    You’re right — there is such a greater incentive to find overpayments than underpayments, even though finding underpayments is technically part of the gig. And, as Bradley says in his “Ready or not…” story, even if a practice discovers it has been significantly underpaid, there is no way to recover all of the dollars lost. In the case of overpayments, a practice could be liable to repay on all claims from October 2007 to the present.

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