CMS Preparing to Launch RACs for Medicare Advantage

King & Spalding

On December 22, 2015, CMS issued a Request for Information (RFI) detailing plans to expand its Recovery Audit Contractor (RAC) program to cover Medicare Advantage organizations. 

Under the current program, CMS hires private RACs to audit providers’ medical and billing records. CMS then pays RACs a contingency fee based on the amount of overpayments recovered. The RAC program was permanently implemented nationwide for Medicare Parts A and B in 2010, and it was later expanded to Medicare Part D. Section 6411(b) of the Affordable Care Act, which became effective in 2010, requires CMS to further expand the RAC program to cover Medicare Part C, the Medicare Advantage program.  CMS, however, has not taken steps to do so until now.

CMS issued the RFI, available here, to solicit industry feedback on its plan, which it outlined in a separate draft Statement of Work (SOW), available here. CMS’s plan is to incorporate RACs into the process of performing Risk Adjustment Data Validation (RADV) audits. The purpose of the RADV process is to verify the accuracy of beneficiary diagnosis data submitted by Medicare Advantage organizations. CMS uses this data to calculate and adjust monthly payments to these organizations, which are based on the relative health status of their beneficiaries. CMS plans to use RACs for both comprehensive and condition-specific RADV audits. CMS states that condition-specific audits will be narrowly targeted reviews of certain conditions determined to have a higher probability of being erroneous.

According to the SOW, errors and omissions in diagnosis data are responsible for 9.5 percent of the improper payment rate for Medicare Advantage. CMS revealed that it plans to use RACs to increase the number of reviews and that its “ultimate goal” is to have all Medicare Advantage contracts subject to a RADV audit for each payment year. CMS currently audits only about five percent of its Medicare Advantage contracts per year.

The Request for Information is available here and the draft Statement of Work (SOW) is available here.

Reporter, J. Gardner Armsby, Atlanta, +1 404 572 2760,

Written by:

King & Spalding

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