What You Need to Know About Recovery Audit Contractors

Recovery Audit Contractors (RAC) are led by the Centers for Medicare & Medicaid Services (CMS). They are part of the Medicare Fee for Service Recovery Audit Program. The program aims to identify and correct improper payments made to Medicare. It looks explicitly for overpayments made on claims from Medicare beneficiaries and determines if providers were overpaid.

Now you might be wondering: Who is a Recovery Audit Contractor, and what do they look for during an audit? What will happen if they find an improper payment? How can I best prepare for an audit before I’m selected? We’re here to help answer your questions. 

Who Are the Recovery Audit Contractors?

During an audit, the RACs have numerous responsibilities to ensure they discover any fraud, waste, or abuse early on and prevent reoccurrence. When they review claims, they are only paid based on a specific percentage of improper payments they find and collect. For instance, once a contractor finds an incorrectly paid claim, they will only receive their compensation once the money is recouped or refunded.

What Do Recovery Audit Contractors Look for During an Audit?

During an audit, the RAC will review various claims on a post-payment basis three years from the payment date. Contractors will search for any claim that may have resulted in improper payments to Medicare or overpaying a provider. There are three types of RAC audits, and the type of audit will determine what documents the RAC will review. 

  • Automated audit – no medical record needed
  • Semi-Automated audit – will review data and potential human review of a medical record or other documentation 
  • Complex audit – a medical record is required

What to Expect During a RAC Audit?

Make note that any DME provider that submits claims to a government program could be subject to a RAC audit. These audits can occur for various reasons, from a minor documentation error or potential fraud. 

If you receive a letter informing you about the audit, you’ll need to respond and follow any requests mentioned in the letter.

If a RAC discovers an improper payment, they’ll provide you with the opportunity to discuss the claim (which is outside the normal appeal process). Afterward, the RAC will share their findings with CMS before posting them on the recovery audits website for a widespread review. Lastly, you’ll need to address the improper payment. 

You can:

  • Pay back the amount by check
  • Allow recoupment from future payments
  • Request an extended payment plan
  • Make an appeal  

The Best Way to Prepare for a RAC Audit 

The better equipped you are for an audit, the more time and money you’ll save. Here are five ways to prepare for an audit. 

  • Perform an internal audit 
  • Identify and correct any coding/billing issues
  • Review problem areas
  • Check your documentation 
  • Find assistance from experts

Learn more detailed information about preparing for a RAC audit here.

You’re Not Alone. Seek Help from the Experts!

Our team are experts when it comes to DME billing, including audits. Our personalized support services ensure you receive the help you need and we’ll make sure you’re equipped before you’re selected for an audit. 

Contact us today to learn more about our DME audit assist services.