Medicare’s Recovery Audit Program (RAC Audits), An Update For Physicians


As many physicians now realize, Recovery Audit Contractors ("RAC") hired by Medicare have turned their attention from hospitals and are now actively pursuing claims submitted by physicians. An audit by a RAC can put a physician and his/her medical practice in severe financial stress. Physicians are often surprised to find that even if all services provided are reasonable, medically necessary, and within the standard of care, RAC recoupments are still occurring with greater frequency. These audits are not just about fraud or outliers. All types of claims are subject to recoupment. Consequently, it is important that a physician practice be engaged and understand how the RACs operate.

The RAC audit and appeals process includes multiple levels of appeal that generally take many months to work through. For example, if a provider wishes to appeal a RAC's adverse determination the first three levels of appeal include a Redetermination, a Reconsideration and a hearing before an administrative law judge ("ALJ"). Sometimes a Rebuttal is also needed before Redetermination, for example, when a recoupment demand is received even though the audit was completely successful. From past experience, providers generally have minimal success at the first two stages of appeal but have enormous success at the ALJ level of appeal. As a result of this success, many providers appeal a RAC denial through at least the ALJ level.

Originally Published in the Birmingham Medical News - April 9, 2014.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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