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.

Under the demonstration program that operated from March 2005-March 2008 in California, Florida and New York, South Carolina and Massachusetts, RACs could review the last four years of provider claims for the following types of services:  hospital inpatient and outpatient, skilled nursing facility, physician, ambulance and laboratory, as well as durable medical equipment.  The RACs used proprietary software programs to identify potential payment errors in such areas as duplicate payments, fiscal intermediaries’ mistakes, medical necessity and coding.  RACs also conducted medical record reviews.  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 underway, with all states scheduled to come on board this year.

On this site, you will find the latest information on the permanent RAC program expansion and RAC news updates.  You also will find information about excellent tool, RACTracker, a Web-based RAC claim management tool that will help your staff keep track of the entire cycle of the RAC process from receiving a Request for Data to the Demand letter and where things can really get confusing, the RAC appeals process.

The RACTracker not only organizes the entire process, but it also simplifies things for your attorney.  Upon receiving your first correspondence, whether a Request for Data or a Demand Letter, it is a good idea to get a RAC Lawyer (a lawyer with specific RAC experience) take a look at our list here: RAC Lawyers.

Once you have an attorney on your team, he’ll be able to log into our systems and see exactly what is going on with your files – greatly simplifying the attorney’s learning curve.