Recovery Audit Contractors

Some have referred to them as bounty hunters, because they make money by finding errors in Medicare claims payments. Unlike other Medicare contractors, Recovery Audit Contractors (RACs) are paid only if they find either overpayments that are refunded by/offset from physicians and providers or underpayments resulting in additional payment by the Medicare Administrative Contractor (MAC). During demonstration projects prior to the initiation of the now permanent RAC program, this proved to be incentive for aggressive and sometimes faulty overpayment identification. While the permanent RAC program contains a few safeguards the demonstration project did not, it is safe to say these companies will continue to aggressively seek out errors and omissions.

New -- The Patient Protection and Affordable Care Act of 2010 substantially expands the RAC program to include Medicaid and Medicare Advantage (Part C) plans. These plans are required to begin contracting with recovery auditors by the end of 2010. This may significantly increase the likelihood that your practice will have an encounter with a RAC.

The following questions and answers have been assembled to help AAFP members understand the RAC program and proactively prepare their practices to properly handle any RAC-related activity.