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Recovery Audit Contractor (RAC) and High-Risk Vulnerabilities in SNFs

by Published On: Apr 22, 2011

The Centers of Medicaid and Medicare uses 4 Recovery Audit Contractors (RAC) to implement the National Recovery Audit Contractor Program, which is responsible for identifying overpayments and underpayments for all providers who submit Medicare Part A and Part B claims. 

This CMS article provides information identifying high-dollar improper payment vulnerabilities associated with RAC reviews of skilled nursing facilities (SNF). This information is important because it can be used by providers to identify and prevent these types of problems from occurring in the future.

Recovery Audit Contractor background

The Centers for Medicare and Medicaid Services (CMS) has implemented the National Recovery Audit Contractor program, which is supposed to find and prevent waste, fraud, and abuse in Medicare. 

CMS contractors will analyze billing trends and patterns across Medicare Part A and Part B (which includes skilled nursing facilities and home health providers), and focus on companies whose services are higher than most providers and suppliers. 

If any paid Medicare claim is found to be improper, the RAC will request repayment from the provider if an overpayment was found.

In November of 2008, CMS was required to stop all work for all 4 Recovery Audit Contractor RAC programs due to protests filed with the Government Accountability Office (GAO) by 2 unsuccessful bidders. 

As of Feb. 4, 2009, the protest was resolved, and the stop-work order was lifted, and CMS continues to implement the Recovery Audit Contractor program.

If you have a question on a claim reviewed by a RAC during the RAC demonstration, please e-mail CMS.

For member questions and concerns, please email LeadingAge.

Recovery Audit Contractors demonstration

In section 306 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Congress directed the U.S. Department of Health and Human Services (HHS) to conduct a 3-year demonstration program using Recovery Audit Contractors (RAC) to detect improper payments in the Medicare Fee For Service (FFS) program, which includes skilled nursing facilities and home health providers. 

The Recovery Audit Contractor demonstration program was designed to determine whether the use of RACs will be a cost-effective means of adding resources to ensure correct payments are being made to providers and suppliers.

More information on Recovery Audit Contractors

For more detailed information and downloads, visit: 


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