The CMS RAC program was designed to correct billing errors mainly caused by medical coding errors, not to prevent healthcare providers from getting what’s due to them. The Medicare and Medicaid systems are fraught with fraud, waste and abuse in addition to honest medical and billing coding errors. Often times these errors actually cost the provider money, which is identified and recovered through the RAC program.

The Myths Of RAC Audits

Myth: RACs deny every claim that they review

Fact: RACs identify underpayments and overpayments of claims paid under the Medicare program for services for which payment is made under Part A or B of tile XVII of the Social Security Act.

Certain types of claims or providers have a high propensity for errors. These claims are more likely to be audited, although all types of claims and providers are reviewed.

Myth: RACs have a contingency fee between 30 and 50 percent.

Fact: The amount of the contingency fee is based on the amount of money from, or reimbursed to, providers.

In FY 2009 and FY 2010 the contingency fees ranged from 9.0% – 12.5% which was paid upon recuperation of the monies to the provider or CMS, not when the error was identified.

Myth: Every RAC denial is overturned on appeal

Fact: Roughly 5% of all CMS claims were appealed in 2010. Only 2.4 percent of 2010 claims collected have been both challenged and overturned on appeal.

The appeals process is a multilevel approach that allows providers to appeal a Recovery Auditor’s overpayment determination.

Myth: RAC have non-clinicians conduct reviews of medical records.

Fact:  Each RAC employs certified coders, nurses, therapists, and a physician.

As part of the proposal a Recovery Auditor Organization chart is submitted that identifies the number of key personnel and the organizational structure of the Recovery Auditor effort.

Myth: RACs can review as many claims as they want from a provider.

Fact: CMS has limited the look-back period for Recovery Auditor reviews to a maximum of 3 years. CMS has limited the number of additional documentation requests that a Recovery Auditor may request at one time, based on provider size and resources. The maximum number of requests is 400 per 45 days.

There are so many more misconceptions about this process. However, if you have the right medical coding services, nearly all errors can be avoided, thus avoiding this entire arduous process of being audited.