What does RAC mean in CONTRACTORS

A Recovery Audit Contractor (RAC) is an auditor that is contracted by the Centers for Medicare and Medicaid Services (CMS) to investigate potential improper payments and to prevent future erroneous payments from occurring.

RACs perform complex audits that assess for correct payment levels, medical necessity, and documentation accuracy and completeness. These include desk reviews, medical record reviews, claim system validation reviews and 100% sampling reviews.

The Centers for Medicare and Medicaid Services (CMS), which oversees Medicare coverage for senior citizens in the United States, contracts with several independent RAC companies to review claims made by hospitals and other providers seeking reimbursement from government programs such as Medicare or Medicaid.

Since it was implemented in 2005, CMS data shows that the program has successfully recouped more than billion in overpayments made to health care providers due to billing errors or fraud.

To become a Recovery Audit Contractor (RAC), organizations must be certified by CMS and meet certain qualifications related to their financial stability, corporate experience and overall audit capabilities. Additionally, all employees of the contractor must pass examinations demonstrating their knowledge of the laws governing Medicare reimbursement before beginning any audit activities.