With the beginning of the new year 2011, healthcare providers and administrative personnel must now concern themselves with audits from Recovery Audit Contractors (RACs). The Tax Relief and Healthcare Act of 2006 required a nationwide and permanent RAC program no later than 2010.
RACs are private companies selected by the Center for Medicare & Medicaid Services (CMS) and have the authority to review claims on a post-payment basis. Their stated mission is to detect and correct past improper payments. There are two types of review: automated (no medical records needed), and complex (medical records required). RACs can look back three years from the date the claim was paid but cannot review claims paid prior to October 1, 2007.
All healthcare providers and related personnel should understand that RACs are paid on a contingency basis. However, any issues that RACs put under comprehensive review must first be approved by CMS. Approved issues must be posted on a RAC website prior to such review.
Providers and hospitals can appeal RAC determinations which is the same appeal process for fiscal intermediary, carrier or MAC denials.
For more on RAC and other types of audits, you can listen to the January 2011 interview with Barry Cepelewicz on the Healthcare Business Network.