RAC Audit Process

Recovery Audit Contractor (RAC) is an aggressive program that aims to seek reimbursements from healthcare providers. In the past few years, the audits have become increasingly frequent at a national scale, and they are expected to continue in the future. A RAC audit can pose a significant threat to the hospitals and other healthcare establishments since pretty much everything is audited that is directly or indirectly medical. If it is found that there have been improper medicare services being given, the consequences are severe. 

In 2005, the Medicare Recovery Audit or RAC was created as part of the Medicare Integrity Program from the Centers for Medicare and Medicaid Services (CMS). The motive was to find any fraudulent payments that are being levied on uncovered services, including the ones deemed to be “not reasonably necessary.” 

RACs also focus on duplicative services, other types of fraud, wrong coding, and other such matters at a national level. The RAC program has identified a significant number of incorrect payments in whichever region that they have operated on till now. 

Audit Process Undertaken By Recovery Audit Contractors

The first step undertaken during the audit by the RAC is to identify several Medicare claims. Then, the RAC requests for medical records to be provided by the health care provider. Once the RAC receives the required documentation, they start with the evaluation and revaluation process, on the basis of which the underpayment, overpayment, or correct payment is decided. 

If the RAC audit process has identified an overpayment, the auditor intimates the Medicare Administrative Contractor (MAC) for adjustment of audited claim and recover the amount. After that, MAC notifies the medicare provider of the situation as required by the law. 

Thus begins the appeals process after the audits. After the health care provider receives the overpayment notification letter, it can start the appeal. If the overpayment is due to the Centers for Medicare, Medicaid, then there are several options. If there has not been any appeal, the amount can be paid by check, an extended payment plan can be requested, or the provider can decide to pay via future payments.

After a medical provider receives a notification by RAC, the provider has three options to exercise – discuss, refute, and redetermine and they are not mutually exclusive. 

Firstly, the provider is given a chance to discuss things with the RAC. The provider can choose to furnish additional documentation, and RAC can, in turn, offer further explanation for the recovery. The data should be supplied within 40 days of the receipt of the Demand Letter, and RAC should be made aware of such submission. The contact should be made directly. 

Another way to go is the rebuttal. The hospital or provider can submit a statement and give substantial data as evidence that supports their claim that recoupment or recovery of overpayment will cause significant financial hardships. It is to be noted that the rebuttal process is not for those looking to contest the decision of RAC. Providers wishing to go the rebuttal route need to contact MAC and send their files directly. 

The last option available to the medical provider is requesting a redetermination. It is also the first level of appeal. The request for redetermination needs to be submitted within 30 days from the receipt of RAC’s notification of demand. The file with the request needs to be sent to MAC. 

One of the best practices to follow is to respond as soon as possible when a demand letter from the RAC is received. If there is a delay, the options available to medicare providers become even more limited as most of them are time-bound. 

It is crucial that the health care establishment carefully reviews the audited claims and data that have been determined to be overpaid as per the RACS. If an actual repayment is needed, the audited claims should be evaluated to find how it happened. 

Types of RAC Audits

Usually, there are two types of RAC audits – Automated RACS and complex audits. 

Automated RAC 

The automated audit aims to expand coverage and find any suspicious claims from medicare providers. Auditors use proprietary algorithms to ensure maximum coverage, compliance and that hospitals are not overcharging and have calculated claims correctly. 

Complex RAC

As opposed to automated ones, complex audits use medical documents to check whether claims are proper. They also seek to answer the question of whether the rendered service was required and was medically necessary. 

The CMS uses contractors for the identification of improper payments. They are paid on a contingent basis, calculated on a percentage of what can be recovered from a medicare provider. The entire concept is based on incentivization so that the auditors have more motivation to get aggressive in their approach and coverage. However, there have been complaints of excessive aggressiveness due to this. 

The fees vary from state to state; usually, the contractors can get between 9 and 12 cents on every dollar recovered. When the RAC has determined that a claim has been incorrectly paid, an immediate notification is sent to the provider for the outstanding amount. 

Although the providers can appeal the verdict, there are several stages involved, leading to additional troubles. 

About Rosenblat 

If you have been hit with an audit notice, you can contact Rosenblat Law. We are a skilled and experienced law firm located in Illinois representing clients in every matter related to the investigation in medical records. We believe in putting our clients first and assist them in every way possible to result in a favorable solution. 

In the case of RAC audits, we do not advise anyone to defend their establishment themselves without having an adept attorney who has handled audits like these. After the audit, the probability of prejudicial outcomes increases significantly. However, with a skillful lawyer, it is possible to mitigate the circumstances, avoid criminal charges or severe penalties, and avoid being placed on OIG Medicare fraud. 

This article has been prepared for informational purposes only and is not legal advice. This information does not create a lawyer-client relationship. Readers should not act upon this article without seeking advice from professional advisers.