September 23, 2008
Recovery Audit Contractor permanent program
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) directed the Department of Health and Human Services (DHHS) to conduct a 3-year demonstration program using Recovery Audit Contractors (RACs) to detect and correct improper payments in the Medicare FFS program. The demonstration operated in New York, Massachusetts, Florida, South Carolina, and California, and ended on March 27, 2008.
The Tax Relief and Health Care Act (TRHCA) of 2006 makes the RAC program permanent and requires expansion of the program to all 50 states no later than 2010. RAC jurisdiction C, of which Florida is part, is scheduled to begin the permanent program October 1, 2008. CMS will announce contractors for the permanent program by the end of September.
What you can do to prepare for the RAC permanent program
The Centers for Medicare & Medicaid Services (CMS) offers the following tips:
Know where improper payments have been found.
A few examples for Florida are:
• Inpatient Hospital services:
• Skin graft and/or debridement for skin ulcers or cellulitis;
• Medical back problems, and
• Heart failure and shock.
• Physicians:
• Vestibular Function Tests.
Permanent RAC findings will be listed on the RACs’ Web pages (when the RAC contractors are announced).
How do you know if you are submitting claims with improper payments?
• Conduct an internal assessment to identify if you are in compliance with Medicare rules.
• Identify corrective actions that need to take place to be in compliance.
Respond to RAC requests for medical records.
• Tell your RAC the precise address and contact person to use when sending medical record request letters. Check the status of your response to ensure it was received.
• Fall 2008: call RAC.
• After January 1, 2010, refer to the RAC’s Web site.
Appeal When Necessary.
• Process for appealing RAC denials is the same as that for carrier/fiscal intermediary/MAC denials.
• Do not confuse the “RAC Discussion Period” with the appeals process. If you disagree with the RAC determination, invoke the appeal process.
• RAC Discussion Period -- providers may request discussion with the RAC Medical Director regarding claim denials.
Lessons Learned.
• Keep track of denied claims.
• Look for patterns.
• Identify and implement corrective actions to avoid improper payments.
Need more information?
For more information on the RAC permanent program, visit the CMS Web site at http://www.cms.hhs.gov/RAC/01_Overview.asp 
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