Recovery Audit Contractor Program

The Centers for Medicare and Medicaid Services (CMS) awarded contracts to four independent agencies, known as Recovery Audit Contractors (RACs), to execute a program identifying improper payments, waste, fraud and abuse within the Medicare and Medicaid programs.

The 2003 Medicare Modernization Act (MMA) §306 required a three-year demonstration project to determine potential efficacy.  The Tax Relief and Healthcare Act (TRHCA) of 2006, §302, mandated a nationwide program by 2010.  The Patient Protection and Affordable Care Act (PPACA) expanded the program to include Medicaid and, eventually, Medicare Parts C and D.  The MMA and TRHCA allow CMS to pay the RACs on a contingency fee basis.  The contingency fee must be returned if the RAC loses at any level of appeal.

This FAQ addresses the following:

  1. What is the Recovery Audit contractor (RAC) program?
  2. Has the program been successful?
  3. How do we know what issues are under scrutiny by the RACs?
  4. Who is my RAC?
  5. What kind of reviews do the RACs perform?
  6. How far back can the RAC look at claims for these reviews?
  7. Are there limits to how many medical records may be requested by the RAC?
  8. What are the targets for RAC reviews?
  9. What are the time limits for responding to a RAC request?
  10. What options exist once we receive the results of the RAC review?
  11. When an overpayment has been identified, who issues the demand letter?
  12. How can we prepare for a possible RAC audit?

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