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Recovery Auditors / RACs

Congress created the Recovery Audit (RAC) program to help the Centers for Medicare and Medicaid Services (CMS) identify improper payments made by Medicare and Medicaid.

The AMA is opposed to the contingency fee structure of the RAC program, and has advocated for numerous changes. While the AMA's efforts have been successful and contributed directly to improvements to the program, the AMA continues to advocate for further changes that would reduce the burden on physicians.

New RAC Contracts
CMS has announced a new round of contracts for RAC auditors. A map of new RAC regions and additional information is available on the RAC website under future changes. CMS will be revising the RAC contractors' program guidelines, or "Statement of Work," for the new contract period. The new contracts are expected to be announced and awarded in 2014. In the interim, CMS is allowing RACs to perform some limited reviews. More information about the pause in RAC audits is available on CMS' website.

The AMA has advocated for specific improvements to the RAC program guidelines, and CMS has already announced the adoption of some of these improvements. For example, RACs now must wait until the second level of appeal before collecting their contingency fee payments. In addition, physicians will not have to choose between initiating a discussion with the RAC and filing an appeal. Check back here for more information when the new contracts are announced.

New RAC Provider Coordinator
CMS has announced a new Provider Relations Coordinator to work with providers on RAC audit issues. While physicians should continue to take questions about specific claims directly to the RAC or Medicare Administrative Contractor (MAC) who conducted the review, providers can raise larger process issues to the Coordinator. For example, if a physician believes that a Recovery Auditor is failing to comply with the documentation request limits or has a pattern of not issuing review results letters in a timely manner, CMS would encourage the physician to contact the Provider Relations Coordinator. The CMS Provider Relations Coordinator is Latesha Walker. Physicians may contact Latesha by sending an email to RAC@cms.hhs.gov (for Recovery Auditor review process concerns/suggestions) or MedicareMedicalReview@cms.hhs.gov (for MAC review process concerns/suggestions).

AMA Improvements

“Look-back Period”: CMS shortened the timeframe a RAC can go back and recover monies from four years to three.

Certified coders: Were not mandatory in the demonstration. In the permanent program each RAC must have certified coders.

Medical Record Request Limit: There was an optional medical record limit set by the individual RAC in the demonstration. Under the expanded program RACs will only be able to request up to 10 medical records per single practitioner within a 45 day period. We continue to advocate however for reducing this further to no more than 3 within a 45 day period.

Medical Directors: Each RAC is now required to have a Medical Director.

RAC Websites: Under the demonstration the RACs were not required to maintain a website. Under the expanded program each RAC is required to maintain a web presence. Also, physicians will be able to look up the status of their audits involving medical record reviews.

Sharing Problems: Under the demonstration there was little information shared with physicians about the types of improper payments they were auditing. Under the expanded program, there will be much more transparency in regard to the specific issues reviewed by each RAC (referred to as “vulnerabilities”) will be required to be posted on their respective websites.

Contingency Fees: During the demonstration, the RACs only had to pay back the contingency fee if they lost at the first level of appeal. This has been changed to all levels of appeal for the permanent program. Also, now the rate RACs receive for locating improper payments will be public.

Validating Areas Targeted by RACs: An independent external validation process is now mandatory to help ensure that the audit areas the RACs plan to focus on are appropriate.

Recent Improvements
CMS announced a number of changes to the Recovery Audit Program in response to industry feedback. Learn more.

AMA Correspondence on the RACs

AMA Testimony on the RACs
RAC Appeals

Medicare RAC appeals fact sheet

December 3, 2014 AMA response to appeals RFI

February 12, 2014 sign-on letter to HHS regarding the Medicare appeal backlog problem

Recent Changes to the Medicare Appeals Process Impacting RAC Audits

Prior to the passage of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA), Medicare maintained that it was permitted to recoup overpayments regardless of whether a physician appealed the overpayment determination. With the passage of the MMA, this has changed. Section 935 of the MMA requires Medicare to halt recoupment if an overpayment determination is appealed at certain times in the appeals process or successfully overturned in whole or in part. Also, the new law changes the way Medicare treats interest payments.

Visit the Section 935 Fact Sheet to learn more.

CMS PowerPoint Slides on New Appeals Rules Concering Limiting Recoupment

Medicare MLN Matters Article on Reporting of Recoupment for Overpayments on the Remittance Advice

RAC Hospital Audits

The AMA is concerned about the negative impacts on patients and physicians resulting from RAC audits of hospital admission status and increased placement in observation care. To alleviate these problems, the AMA is advocating for rescission of the three-day inpatient stay requirement for patient coverage of skilled nursing facility (SNF) care, increased transparency of commercial black-box edit software and physician decision-making regarding admission status; and for physicians to be held harmless from audits related to admission status.

AMA/AHA letter to CMS supporting delayed enforcement of the two-midnight policy, November 8, 2013

June 25, 2013 comment letter to CMS on Medicare 2014 Inpatient Prospective Payment Systems (IPPS)

Patient Admission Status/Part B Inpatient Billing: AMA comments to CMS, May 16, 2013

Observation Care/Hospital Outpatient Rule: AMA comments to CMS, August 31, 2012

Contact Information for the RACs
Webinar and other Resources