August 2008 Coding Tip (View More 2008 Coding Tips)

Medicare Recovery Audit Program

Congress has mandated the Medicare Recovery Audit Program to detect and correct improper Medicare payments. A three-year demonstration program, implemented by CMS, began in March 2005. The program, designed to use Recovery Audit Contractors (RACs), will go nationwide no later than January 2010. Chosen by a competitive process and organized into jurisdictions; RACs are paid on a contingency fee, that is, the RACs receive payment based on the number of errors (underpayment and overpayment) they find.

If improper payments are found the RACs will contact the provider to either collect for over payments or pay any underpayments. This is called an automated review. If there are errors found the RAC will request medical records from the provider to further review the claim. The RAC would determine how the claim was incorrect (over, under, or correct payment). This is called complex review. The provider has 30 days to pay or appeal before the overpayment amount begins accruing interest and Medicare starts deduction from future reimbursement.