Recovery audit contractor program increases government scrutiny, risks


The federal government is increasing its efforts to detect overpayments in the Medicare program. We detail the steps to take now, before a notice arrives, and points to consider should your practice receive a request for a recovery audit contractor audit.

Key Points

The federal government is hiring companies to audit medical practice claims and seek the return of payments made in excess of the amount the auditors determine the practices should have been paid. The government is paying the auditors a percentage of the amount they recover, so they have a clear incentive to find overpayments (as reportedly occurred in more than 96 percent of the cases in which billing irregularities were found during the demonstration project that preceded the national rollout of the program). Those practices that bill for high-value services are at the greatest risk of being audited.

CMS receives 1.2 billion Medicare claims per year, so every claim cannot be audited. Therefore, the RACs are using software to identify those practices that bill in excess of their peers and those that have unusual patterns of billing or coding. RACs also are performing random audits.

Remember these points if your practice receives a RAC audit request:

The author is a Medical Economics consultant and principal in the healthcare law firm of Kern Augustine Conroy & Schoppmann PC, with offices in New Jersey, New York, and Pennsylvania, and affiliates in Florida and Illinois. Malpractice Consult deals with questions on common professional liability issues. Unfortunately, we cannot offer specific legal advice. If you have a general question or a topic you'd like to see covered here, please send it to

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