A Helpful RAC Program Overview

Recovery audit contractors are responsible for identifying improper or erroneous Medicare payments under fee-for-service plans. The program is currently one of the best resources to ensure that waste and abuse of Medicare funds is kept to a minimum. This RAC program overview will discuss what the program does and how contractors are selected.

Early RAC Program

From 2005 to 2008, the recovery audit contractor program was operating under demonstrative purposes. By July 2008, the Center for Medicare & Medicaid Services, or CMS, was reporting that recovery audit contractors had successfully corrected over one billion dollars in improper Medicare payments, with about 96 percent of these being overpayments and 4 percent being underpayments to be repaid to health care providers. During this period, over $900 million was recovered to the Medicare Trust Fund, even though the recovery audit contractor program was not yet permanently instituted in all 50 states.

Permanent RAC State Programs

In 2006, the Tax Relief and Health Care Act was established to offer tax extenders and update provisions that affected health savings accounts. However, it also began the law which required the United States Department of Health and Human Services, or DHHS, to make the RAC Program a permanent fixture in every state on or before January 1, 2010. There are four national recovery audit contractor services: CGI Technologies and Solutions in Fairfax, Virginia, Connolly Consulting Associates of Wilton, Connecticut, Diversified Collection Services in Livermore, California, and HealthDataInsights of Las Vegas, Nevada.

Basic Recovery Auditing

The recovery audit contractor program's basic goal is to identify and recover any and all improper payments made to health care providers by Medicare users. Improper payments can come in the form of overpayments from health care providers submitting claims which do not line up with the Medicare coding, or underpayments from health care providers submitting claims for procedures simpler than those actually performed. Providers who may be examined by the RAC program include hospitals, private physicians, nursing homes and others. Overall, more overpayments are discovered than underpayments, resulting in cost savings for tax payers.

Selection of the RACs

The federal government used best value determination to select the recovery audit contractors in an open competition. Some of the factors that led to the choices of the four corporations included technical approach, high quality claims analysis, conflict of interest reviewing, and outstanding customer service skills. Recovery audit contractors receive their payment on a contingency basis for both overpayments and underpayments recovered, so competitive fees were also a factor in the selection of the contractors for the RAC program.

Because the Medicare program is so large, it benefits every American for changes like the RAC program to come in and ensure everything is running properly. As this RAC program overview demonstrates, the control of misuse of Medicare funds is an important task that has been assigned to the best recovery audit contractors possible. The RAC program enables the Medicare program to continue to benefit millions of Americans by minimizing waste and abuse.
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