Frequently Asked Questions

The acronym “RAC” stands for Recovery Audit Contractor. These are companies (currently 4 regional contractors nationally) that have been tasked by the Centers for Medicare and Medicaid Services (CMS) to detect overpayments and underpayments to providers from federal health care programs.

The RAC’s conduct both simple and complex audits. The simpler audits utilize proprietary software supplied by CMS to detect errors in billing related to coding and modifier use. Complex audits involve requesting information from the provider to determine the medical necessity of services provided and subsequently billed and reimbursed.

In the recent past, the RAC’s have concentrated mostly on audits of facility services, primarily those provided at hospitals. The RAC’s have already begun their expansion into physician audits. These efforts are going to increase dramatically in the near future.

The RAC’s are paid anywhere from 9% to 12.5% of all recoveries resulting from their audits, depending on which region they audit, which is an incentive for the aggressive pursuit of suspected overpayments on claims.

Fi-Med believes that your best defense against the growing threat of a RAC audit is a pre-emptive assessment of the vulnerabilities of your practice based on your current billing patterns. We possess the technological tools necessary for you to identify significant variations in your billing patterns as compared to your colleagues. Once identified, we review your documentation for codes that appear to be over-utilized for insufficiencies related to medical necessity.