Records Management Blog | Practical Records Management

RAC Audits - What is a RAC Audit? Why should I care?

Posted by Michael Thomas on Tue, Feb 23, 2010 @ 12:38 PM

The first question when I mention RAC Audit to someone is inevitably the same. "What is a RAC Audit?" They ask. And it makes sense. In the great shuffle of money through the government systems, many of the programs and acronyms seem to blend together and create a general sense of confusion. But, RAC, which is an acronym that stands for Recovery Audit Contractor, is different. RAC represents the efforts of the Centers for Medicare & Medicaid Services (CMS) to mitigate overpayments to providers.

This means that in rolling phases throughout 2009 and 2010, Healthcare Providers - Hospitals, Nursing Homes, Home Healthcare Organizations, Durable Medical Equipment Companies, Physicians Offices, or anyone else who bills Medicare - are going to be subject to audits to review improper payments. The RAC Program was implemented to protect the Medicare Trust Fund from fraud, abuse, and waste; and in 2007, $10.8 Billion Dollars were identified as improper payments.

The RAC Audits are being performed by four contractors, who have been selected by CMS, and are paid on a contingency basis. This means that it is in the Contractor's best interest to identify improper payments, and that the process is almost sure to expand to State-Run Medicaid Programs within the next few years.

The Facts and Figures associated with a RAC Audit...

  • Demonstration program conducted in:  AZ, CA, FL, MA, NY and SC 
  • $980 million dollars in overpayments
  • $38 million in underpayments were paid to healthcare organizations
  • RAC auditors made approximately 525,000 overpayment determinations
  • Over 102,000 appeals were filed and 4.6 percent of the reviews were overturned
  • 85% of Medicare recouped payments were received from inpatient hospitals
  • $693.6 million was returned to Medicare Trust Funds
  • Costs for running the program were $0.20 for each dollar collected

What can be done to mitigate the impact of RAC Audits on my organization?

Once we've defined a RAC Audit, and the impact is understood, the next question that I'm often faced with is - "What do I do about it?"

This is an easier answer. Together with our partner, Hyland Software, AMS Imaging offers a unique solution to help organizations deal with the RAC Audit Process. From Start to Finish, our RAC Audit Software Solution provides the immediate visibility and detailed reporting required to address audit concerns. In fact, the RAC Audit Tracking Solution boasts the following features:

  • Prompt response to RAC auditor's medical record requests
  • Maintains itself without the need to hire additional staff
  • Identifies missing documents so prompt action can be taken
  • Generates e-mail notifications and letters in response to audit requests
  • Provides assurance that all deadlines will be met, including appeal initiation
  • Generation of reports to track the status of audits through the RAC process
  • Identification of trends to identify potential problems within an organization to help alleviate future issues
Find out more about how AMS Imaging Can help address your RAC Audit Concerns - Contact our Solution Development Team today.

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