Practice Management Alert

Question: I keep hearing about RACs. What are they and why are billers so wary of them?

Texas Subscriber

Answer: RAC stands for recovery audit contractors, and they receive a bonus every time they recoup your Medicare payments.

Background: The Medicare Modernization Act of 2003 mandated that CMS establish a RAC program to find and recover Medicare overpayments. RACs may review any provider and are now undergoing a demonstration project in California, Florida and New York. Section 302 of the Tax Relief and Health Care Act of 2006 makes the RAC program permanent and requires that the program expand to all 50 states by 2010, according to the CMS Web site.

Example: One of the auditors- responsibilities, but not the only one, is to verify if a patient's primary insurer and Medicare have both been billed for a single claim or if Medicare paid when the patient's primary insurer should have paid instead. In both situations, the RAC will verify the billing errors, including any potential underpayments, and begin recovery of any controversial overpayments.

Prepare now: Be diligent in gathering your patients- insurance information and determining the primary payer. Establishing good coding and billing procedures will help protect your practice during RAC review or any other audit.

Go online: For more information on RACs from CMS, visit http://www.cms.hhs.gov/rac/.

-- The answers to the Reader Questions were provided and/or reviewed by Barbara J. Cobuzzi, MBA, CPC-OTO, CPC-H, CPC-P, CPC-I, CHCC, president of CRN Healthcare Solutions, a coding and reimbursement consulting firm in Tinton Falls, N.J.