We’ve known for a while now that the Medicare Recovery Audit Contractors ("RAC") program would eventually start impacting physicians and other Part B providers. That time has now come as medical practices and physicians are beginning to receive both audit and repayment letters from RACs. So, if you’re still not familiar with this aggressive audit and recovery program, you are well-advised to begin preparing for the possibility that some of your claims may be reviewed by a RAC.

The RAC program is a national effort by the Centers for Medicare & Medicaid Services ("CMS") identify and correct improper Medicare payments. The RACs (private entities under contract with CMS) cover four national regions and are paid a percentage of the amounts they recover. The RACs and their regions are:

Diversified Collection Services, Inc. of Livermore , California , in Region A, initially working in Maine , New Hampshire , Vermont , Massachusetts , Rhode Island and New York .
CGI Technologies and Solutions, Inc. of Fairfax, Virginia, in Region B, initially working in Michigan , Indiana and Minnesota .
Connolly Consulting Associates, Inc. of Wilton , Connecticut , in Region C, initially working in South Carolina , Florida , Colorado and New Mexico .
HealthDataInsights, Inc. of Las Vegas, Nevada, in Region D, initially working in Montana , Wyoming , North Dakota , South Dakota , Utah and Arizona .

RACs may identify improper payments in one of two ways: (1) automated reviews of paid claims – the RAC makes an overpayment (or underpayment) determination without requesting or review medical records; and (2) complex reviews which involve a manual review of medical records.

So what should you do if you receive a RAC repayment request or records request? First, make sure that the services in question are actually within the period subject to RAC review. Under the RAC enabling legislation, RACs may only go back three years and cannot review claims from prior to October 1, 2007.

Next, consider having your own coding expert review the services (under attorney-client privilege) to see if there’s a basis to mount an appeal. Under the RAC program, providers have a limited period of time to open an informal discussion with the RAC to raise issues with or provide additional information impacting upon the RAC determination. Providers may also appeal RAC determinations through the CMS claims appeal process. But, pay close attention to the deadlines outlined in the RAC determination letter because failing to meet the applicable appeal deadlines can cause you to lose your appeal rights.

More information about the RAC program can be found here: http://www.cms.gov/RAC/