The Medicare Recovery Audit Contractor Program

The Medicare Program’s Recovery Audit Contractor (“RAC”) Program has significantly increased the volume of post-payment reviews conducted on providers, including hospitals.  While proper Medicare payment is critically important, the RAC program has also been very burdensome to providers, especially given that RACs are paid based on a percentage of their overpayment recoveries.  RAC reviews also result in a large percentage of payment denials that are then reversed during the Medicare appeals process.

To properly balance the interests of the RAC program, the FAH believes reforms are needed to the program.  The FAH supports the following policies and reforms regarding RACs:

  • The scope of RAC reviews, and contractor reviews more broadly, should exclude any medical necessity matter involving physician judgment.  Alternatively, CMS should resolve the conflicting standards addressing patient status determinations in the manual provisions by creating one reasonable, balanced standard;
  • Additional documentation requests (ADRs) should be limited to those where the likely appeals can be resolved by ALJs within 90 days of receipt;
  • Payments to hospitals should not be recouped until after a final resolution of an ALJ appeal confirming an overpayment; and,
  • RAC denials should be reviewed and approved by a physician on staff at a RAC before being issued to a provider;