Who are RACs?

Pressure to recover overpayments to fund state and federal healthcare programs has led the Centers for Medicare & Medicaid Services (CMS) and state agencies to contract audit services. These include Recovery Audit Contractors (RACs), Zone Program Integrity Contractors (ZPICs), Medicaid Integrity Contractors (MICs), and Medicaid Fraud Control Units (MFCUs). CMS uses the Recovery Audit Program to detect and correct improper payments in the Medicare fee for service (FFS) program and provide information to CMS and medical review contractors that could help protect the Medicare trust funds by preventing future improper payments.

RACs use proprietary software programs to identify potential payment errors in such areas as duplicate payments, fiscal intermediaries’ mistakes, medical necessity, and coding. RACs also conduct medical record reviews. RACs may review any medical claims paid prior to Oct. 1, 2007, and may review the last three years of provider claims for the following types of services:

  • Hospital inpatient and outpatient
  • Skilled nursing facility
  • Physician
  • Ambulance and laboratory, and
  • Durable medical equipment (DME)

If your practice or healthcare organization bills FFS programs, your claims are subject to review by RACs. In 2014, RACs identified and corrected $2.57 billion in improper payments.