CMS announces resumption of limited Medicare audits

August 07, 2014
Area(s) of Interest: Fraud & Abuse Payor Issues and Reimbursement 

The Centers for Medicare and Medicaid Services (CMS) said it will restart the Recovery Audit Contractor (RAC) program following a brief hiatus. The agency had temporarily halted the audits, which had been criticized by physicians as overly aggressive, as it made its way through procurement of new contracts and identified improvements to the program.

The RAC program is responsible for identifying fraud and waste in the Medicare system by detecting improper Medicare payments. Findings by the Office of Medicare Hearings and Appeals showed that about 50 percent of the estimated 43,000 appeals by physicians of RAC audits were fully or partially overturned. 

Though CMS had originally said it would resume the program after the next round of RAC contracts were put into place, the agency decided to resume limited audits now due to delays in the RAC contracting process. CMS says it hopes the new contracts will be in place by the end of the year.

CMS’ proposed changes to the program will not go into effect when the RACs restart in August, as CMS says those are planned for the new contracts, which have not yet been awarded.

Among these changes will be much-needed safeguards for physicians. These include requiring RACs to wait 30 days before asking the Medicare administrative contractor to recoup payments determined to be improper. This delay will allow time for physicians to discuss the results of the audit with the RAC. Previously, the short timeline for appeals meant that physicians had to immediately choose between initiating a discussion and filing an appeal.

RACs will also no longer receive a contingency fee directly following the recoupment of a payment they deemed “improper.” Rather, if a physician chooses to appeal the results of an audit, the RAC will not be paid until the physician has exhausted the second level of appeal. Auditors will also now be required to confirm receipt of a physician's request for discussion within three days. Previously, no such confirmation was required, leading to frustration among physicians, particularly given the short timeline for document production, discussion and appeal.

The limited audits will begin with such procedures as spinal fusions, outpatient therapy services, durable medical equipment and cosmetic procedures. Eventually, these categories will be broadened.


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