Don’t Just Pay the RAC

Medicare Recovery Audit Contractors (RACs) mine data using automated systems to detect and recover improper Medicare payments. RAC audits pick up billing and coding errors and deny claims based on those errors. In many instances, the service was provided and was billable. In some cases, the coding error makes no difference in reimbursement, sometimes reimbursement should be higher, sometimes lower, but still reimbursable, under some code. In some cases, the RAC’s automated systems deny claims that were properly billed, because of software coding flaws. RAC auditors don’t correct billing errors, they just take the money back.

According to a recent American Hospital Association study, RAC auditors denied more that $63 million in claims by hospitals, where the service was provided, but billed using the wrong code.

In the case of a claim, denied by the RAC, where service was provided, but billed using the wrong code, providers should re-bill the claim. In re-billing the claim, the provider should clearly identify that the claim is being re-billed based on the RAC denial, identify the billing error, the RAC audit findings and the proper code. When the RAC improperly denies a claim that was properly billed, the provider should file a timely appeal. RAC audits have been compared to death by paper cuts. It is time consuming and costly, but essential, to challenge claims denied by a RAC, where service was provided. Don’t just pay the RAC.