RAC Audits: What Are They & What You Need to Know

What Are RAC Audits?

Recover Audit Contractors (RACs) are hired by CMS to conduct Medicare/Medicaid overpayment and underpayment audits on healthcare providers. Through their data mining efforts, RACs are able to determine where improper payments occurred and will then pursue collection/recovery of those payments. RACs are financially rewarded with a percentage of the dollars they collect.

While RACs are critical to the operation of Medicare and Medicaid, they are incentivized to recover as much as possible, which can sometimes lead to invasive, demanding requests and very little assistance.

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What to Do if You Receive a RAC Letter

While RAC Audits can be appealed, avoided and prevented, you should never ignore a RAC letter as you are required to comply with CMS’ regulation. We recommend contacting Crossroads Health before you do anything. The demands in this letter may not apply to your organization. You should take all CMS communications seriously, but you should also consider your options prior to responding. Crossroads Health will guide you through the RAC process from start to finish.

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What Triggers a RAC Audit?

RACs use software to identify errors at the provider level.Basically, RACs data mine healthcare providers in their allotted territory looking for “red flags” - if they find any (or believe they could) they send a letter demanding that you provide more data.

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RAC Auditors by Territory

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How to Prepare for a RAC Audit

Sadly, RAC Audits are seldom single occurrences so it’s important to take steps now to prepare for the near inevitability of one. Here are a few steps you can take to prepare for a RAC Audit:

1. Contact an expert, like Crossroads Health, who will walk you through the process step-by-step. Unlike RACs, Crossroads Health works for you, the healthcare provider.

2. Shift human resources and put your best people on it.

3. Increase monitoring of your billing processes and attempt to identify the root cause of improper payments. Crossfire™ by Crossroads Health does this on behalf of providers using proprietary technology & specialized analysts.

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There may be massive risk hiding in your credit balances, potentially to the tune of millions of dollars in fines and penalties if out-of-compliance Medicare / Medicaid overpayments are discovered. Even if you are being audited for a different reason, credit balances are often a point of interest during a RAC Audit.

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Be prepared for your RAC audit with a team of credit balance experts from Crossroads Health backing you up. Our expert staff and proprietary technology makes the process a breeze. If you have indeed discovered delinquent Medicare credit balances, you are required to disclose them. However, healthcare providers often misidentify credits as out-of-compliance when, in fact, they may not be. We’ve helped healthcare providers avoid hundreds of millions of dollars in CMS fines by applying our business intelligence to properly identify which credit balances are truly due a refund, and which are not.