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RAC Audit Program

The Medicare Modernization Act of 2003 established the Medicare Recovery Audit Contractor (RAC) program as a demonstration program to identify improper Medicare payments - both overpayments and underpayments.  RACs were paid on a contingency fee basis, receiving a percentage of the improper overpayments and underpayments they collect from providers.  In July 2008, CMS reported that the RACs had succeeded in correcting more than $1.03 billion in Medicare improper payments.  Approximately 96 percent ($992.7 million) of the improper payments were overpayments collected from providers, while the remaining 4 percent ($37.8 million) were underpayments repaid to providers. 

The Tax Relief and Health Care Act of 2006 made the RAC program permanent and authorized the Centers for Medicare & Medicaid Services (CMS) to expand the program to all 50 states by 2010.  Nationwide rollout  of the permanent RAC program is currently underway. ( source:

Eighty- five percent of RAC overpayments were collected from inpatient hospital services. Most inpatient hospital overpayments were collected for lack of  medical necessity and incorrect coding. In preparation for RAC audit, hospitals are employing the services of independent physicians advisors for medical necessity review. Case Management Consultants provides specialty trained physician advisors to assist hospitals in medical necessity review, admission review, and procedure setting review.

RAC Audit Rapid Response Team™

CMC established the RAC Rapid Response Team as a ready- to- go unit consisting of experienced physicians specifically design to assist hospitals, health systems and providers  in preparing and responding to RAC request for clinical information. The team is available to perform retrospective clinical denial review, and  provide expert independent physician advisor representation through out the different levels of RAC audit appeal process.

The Rapid Response team can be deployed  at a very short notice to start assisting hospitals and health systems  in responding immediately to RAC request for clinical information in order for the hospitals to be in compliant with the deadline for responding to RAC request for clinical information.

CMC'S Compliance Management is designed to evaluate  and ensure that the hospitals are in compliance with CMS rules and regulations.

Services provided by CMC RAC Audit Rapid Response Team include:

  • Retrospective Clinical Denial Management
  • RAC Denial Management
  • FI/MAC Appeal Management
  • QIC Appeal Management

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