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Recovery Audit Contractors

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.

Program Integrity White Paper
On June 29, 2012, the AMA responded to a request from the Senate Committee on Finance for input on waste, fraud, and abuse reforms. The AMA submitted a white paper that outlined the recommendations of the AMA for greater value and efficiency in program integrity efforts and focused on issues regarding the RACs.

RAC Audits of E&M Services
The AMA has prepared a fact sheet with information on RAC audits of E&M services.

Medicare/Medicaid audit webinar
On September 19, 2012, the AMA hosted a webinar titled "Medicare & Medicaid Audits What Physicians Need to Know" lead by Cybil Roehrenbeck, JD, Washington Counsel in Government Affairs. The archived webinar and slidedeck are available for viewing.

Improvement to the Medicare RAC Program as a Result of AMA Advocacy

Due to considerable advocacy by the AMA, CMS made several changes to the expanded RAC program including:

  • “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 requires 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 and problem areas to be 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 to help ensure that the audit areas the RACs planned to focus on are appropriate, is now mandatory.

AMA Correspondence on the RACs
AMA Testimony on the RACs
RAC Appeals

Medicare RAC appeals fact sheet

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

Contact Information for the RACs
Additional Resources