Beginning this month in New York, Florida and California, CMS authorized Recovery Audit Contractors (RACs) to review Medicare claims to identify improper payments made to healthcare providers and collect overpayments. This pilot program, required by law in the Medicare Modernization Act of 2003, will last for three years and, afterward, may be expanded to additional states.

Billed as a cost-effective means of ensuring that physicians receive correct payments and that taxpayer funds are used as intended, RACs will be paid on a contingency-fee basis. The greater the overpayments RACs discover, the more they will be paid. Proprietary software will be used to detect under and over-payment of Part A and B claims.

Claims reviewed by RACs will have been submitted to the carriers/intermediaries no less than a year before to ensure that the ordinary processing will have been completed. Additional appeals processes will be available to contest a RAC’s overpayment determination. At a recent meeting, agency staff clarified that RACs would not be allowed to evaluate the claims that CMS or a Quality Improvement Organization (QIO) have previously audited.

To learn more, visit CMS MedLearn Matters: