Understanding RAC Audits and How They Impact Private Practice Doctors

As a private practice doctor, you may be familiar with audits of your medical records, billing practices, and compliance with healthcare regulations. The Recovery Audit Contractor (RAC) program, established by the Centers for Medicare & Medicaid Services (CMS), is one such audit program that can result in significant financial losses and legal issues for healthcare providers.

A RAC audit is an audit of medical records and billing practices conducted by a RAC, a third-party contractor hired by CMS. The goal of the audit is to identify and recover improper payments made by Medicare and Medicaid. RAC auditors review medical records, claims, and other documents to identify overpayments or underpayments made to healthcare providers.

Several factors can trigger a RAC audit, including:

• Unusual billing patterns: Billing practices that deviate from the norm or show a significant increase in claims volume or charges can raise suspicion.
• High-risk procedures: Certain procedures, such as those with a high rate of errors, are more likely to be audited.
• Claims with errors: Claims that contain errors or discrepancies are more likely to be audited.

RAC audits can go back as far as three years from the date a claim was paid or denied. Additionally, CMS has the authority to reopen claims up to ten years after the date of payment.

There are several steps private practices can take to protect themselves from a RAC audit:

• Ensure your practice is compliant with all Medicare and Medicaid regulations, including documentation and billing requirements.
• Conduct regular self-audits to identify and address any potential compliance issues before they are identified by a RAC auditor.
• Consider engaging the services of a healthcare consultant or auditor to conduct an external audit and identify any potential compliance issues.

The cost of defending against a RAC audit can be substantial, especially if legal representation is required.

RAC audit insurance helps protect healthcare providers from these financial losses by covering the cost of audit defense and any resulting fines or penalties.

If your practice is audited and you have RAC audit insurance, here’s what to expect:

• You’ll receive a letter from a RAC auditor notifying you of an upcoming audit.
• You’ll contact your RAC insurance provider and notify them of the audit.
• Your insurance provider will assign an attorney to your case to begin preparing your defense, including reviewing medical records and billing practices
• Your attorney will identify areas where improvements can be made and work with you to address any issues identified by the auditor.
• When the audit is complete, your attorney negotiates with the RAC auditor to minimize the financial impact on the practice

Interested in learning more about RAC Audits? The Doctors Company provides RAC audit legal assistance for members as part of their medical liability policy coverage and provides more guidelines for protecting your practice here.

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