What is Recovery Audit Contractors?

Recovery Audit Contractors (RAC) are independent companies that are contracted by the Center for Medicare and Medicaid Services (CMS) to review Medicare Part A and B claims for potential overpayments. RACs are paid a percentage of the overpayments that they identify and recover, and they are required to meet certain performance standards in order to maintain their contracts.

RACs were first introduced in 2006 as part of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA). The goal of the RAC program is to reduce Medicare overpayments and improve the accuracy of Medicare claims processing.

RACs review claims for a variety of potential errors, including:

* Coding errors: These occur when a provider uses the wrong code to bill for a service or procedure.

* Billing errors: These occur when a provider bills for a service or procedure that was not performed, or when the provider bills for a higher level of service than was actually provided.

* Documentation errors: These occur when a provider does not have adequate documentation to support the services or procedures that were billed.

RACs can review claims up to three years old, and they can request additional documentation from providers to support their claims. If a RAC determines that a claim has been overpaid, the provider is required to refund the overpayment to Medicare.

RACs have been controversial since their inception. Critics argue that the program is too aggressive and that it has resulted in providers being unfairly penalized for innocent errors. Supporters of the program argue that it is necessary to reduce Medicare overpayments and ensure the accuracy of Medicare claims processing.

The RAC program is ongoing, and CMS is continuing to monitor its performance and effectiveness.