The Medicare Recovery Audit Contractor Program: A Survival Guide for Healthcare Providers, 1st Edition (Paperback) book cover

The Medicare Recovery Audit Contractor Program

A Survival Guide for Healthcare Providers, 1st Edition

By Duane C. Abbey

Productivity Press

124 pages | 1 B/W Illus.

Purchasing Options:$ = USD
Paperback: 9781439821008
pub: 2010-02-22
Hardback: 9781138431973
pub: 2017-11-15

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Medicare fraud is big business, but while only a few profit from intentional malfeasance, the Centers for Medicare & Medicaid Services is now taking a closer look at everyone. The Medicare Recovery Audit Contractor Program, already infamously known as the RAC, swings into full operation in 2010 and every healthcare provider that receives payment under any of the Medicare fee-for-service payment systems will be subject to RAC scrutiny. And scrutinize, they will… .

Instead of developing another bureaucracy, the government has turned the job of auditing over to outside firms whose payment will be based exclusively on finder fees for recouping improper payments. There will be little tolerance for poor record keeping or gray areas of coding.

Written by medical billing guru and Lean accounting expert, Duane Abbey, The Medicare Recovery Audit Contractor Program: A Survival Guide for Healthcare Providers explains all that is required to prepare and successfully defend against inappropriate RAC audit recoveries. Using the same succinct style that always makes his writing so accessible, Abbey illustrates his lessons with simple case studies placed in the context of a fictitious community whose population is served by a hospital, clinics, a nursing facility, and other providers all seeking to maintain compliance and profitability.

In discussing RAC guidelines, this resource —

  • Shows how to identify overpayment areas and associated compliance issues
  • Details a systematic problem-solving process relative to RAC processes
  • Addresses resource requirements including new personnel, such as RAC specialists
  • Includes planning models for developing compliance departments
  • Provides an extensive glossary to make sense of medical billing’s alphabet soup of acronyms

While the book works well as a stand-alone reference for those seeking advice on RAC audits, readers will also discover that this volume extends the lesson of Abbey’s classic Compliance for Coding, Billing & Reimbursement, Second Edition , making this book a natural companion for those wanting to fully explore the role of compliance and Lean accounting in medical billing.


For many nurse leaders, understanding the mysteries of corporate compliance, the Office of the Inspector General, or the Department of Justice has been challenging to say the least. Dr. Duane Abbey has taken these topics and, specifically, the newest kid on the compliance block-the Recovery Audit Contractor (RAC) Program-and translated them into a very understandable language that nursing leaders can get their arms around, particularly in the surgical arena. … Although the subject is potentially intimidating, this book is a very engaging and understandable read for nurse leaders. As an experienced leader but one who is a novice in compliance matters, I found that the author provides this book as a tool kit to help leaders find the information necessary to proactively prepare for a RAC audit. The author does a great job of taking the technical language related to RAC audits and incorporating the use of storytelling to explain the important concepts in an understandable and engaging format. Not surprisingly, the author has more than 25 years of health care experience, with much of his time spent divided between teaching the concepts of billing and compliance and consulting with health care organizations.

—Maureen C. Chadwick, MSN, RN, NE-BC, Director, Peri-Operative Services, Saint Vincent Health Center, in the AORN Journal, May 2011, Vol. 93, No. 5

Table of Contents

Acronym Listing

Chapter 1 Introduction


Conventions Used throughout the Book

Chapter 2 Purpose, Structure, and Intent of the RAC Audit Program


RAC Demonstration Project

Selection and Utilization of RACs

CMS and the RAC Operations

Payment of the RACs

Summary and Conclusion

Chapter 3 RAC, OIG, and Medicare Audits


General Categories of Audits

Medicare Audits

OIG and DOJ Audits

Medicare CERT Program

OIG Guidance: Federal Register

RAC Audits

What Happened to the Underpayments?

CMS’s Approach for the RACs

Summary and Conclusion

Chapter 4 Brief Review of Healthcare Payment and Payment Systems


Claims Adjudication Requirements

Covered Individual/Covered Services

Proper Orders with Appropriate Diagnostic Justification

Qualified Facility or Practitioner

Appropriate Documentation

Medicare Billing Privileges

Correct Claim, Filed Timely

Medicare Payment Systems

Medicare Fee Schedules

Medicare Prospective Payment Systems

Medicare Payment System Interfaces

Summary and Conclusion

Chapter 5 RAC Audit Issues


Underlying Compliance Areas

Medical Necessity

Payment System Interfaces

Inadequate Guidance

Confusing Guidance

Sample Problem Areas by Provider Type


Critical Access Hospitals

Physicians and Clinics

Other Healthcare Providers

Summary and Future Issues

Chapter 6 RAC Processes


Problem Identification, Data Mining, and Probe Audits

Automated Reviews

Complex Reviews



Stratified Sampling

Using Extrapolation in Reverse

Summary and Conclusion

Chapter 7 Understanding the RAC Appeals Process


Appeals Process

RAC Discussion

Request for Redetermination


Administrative Law Judge

Medicare Appeals Council

Federal District Court

Pursuing the Appeals Process

Developing Organizational Resources

Case Development

Hierarchy of Medicare Guidance

Clarifying Guidance

Ambiguous Guidance

Incorrect Guidance

Requesting Guidance and the Federal Register

Coding/Billing versus Adjudication/Payment

Directives Inherent in the Payment System

Interpretation of Guidance

Other Issues

MMA 2003 Protection Provisions

Addressing Extrapolation Cases

Summary and Conclusion

Chapter 8 Meeting the RAC Audit Challenge


Reviewing and Assessing Current CBR Compliance Program

Adapting Your CBR Compliance Program

Budgeting and Financial Impacts

Internal RAC Program Training

Summary and Conclusion

Subject Categories

BISAC Subject Codes/Headings:
BUSINESS & ECONOMICS / Quality Control
BUSINESS & ECONOMICS / Industries / Service Industries
MEDICAL / Administration