January 24, 2014

Armed with the Recovery Audit Contract (RAC) Program, the Federal government has been very successful in recouping Medicare overpayments from health care providers in recent years. During a RAC audit, program contractors review claims to identify those that received improper Medicare payment. The claims processing contractor adjusts the payment to reflect proper payment amounts and will send a demand letter requiring providers to pay back any overpayments.

RAC contractors are paid for their work through contingency fees, which are directly related to the amount of overpayments recovered from providers. As a result, the RAC Program is structured to encourage auditors to cast a wide net and retroactively deny as many Medicare claims as possible.

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