Healthcare Audit: Stay a Step Ahead of the RACs

RAC audits are audits or reviews that are done by the recovery healthcare audit or RAC contractors. We have the automated reviews where they're going out and just - they're scouring at your claims to see if there's anything unusual, if you've been “overpaid” or underpaid.

They're supposed to be looking for both overpayments and underpayments. However, if you look at the statistics, everyone, you will realize very quickly that what they are looking for are overpayments.

For instance, an automated review might pick up the fact that you did two blood transfusions on the same date of service, 36430 is the CPT code. And the guidance in this area is not exactly crystal clear. But basically, they're going to maintain that you should only have one 36430 per day per date of service even though on the literature it says it's per encounter. It doesn't seem to count.

Where did these things come from? Well, this is really an outgrowth of long term, ongoing healthcare audits and concerns about overpayments. And Congress finally got into the act and they said, “Hey, let's quit messing around with this. Let's really do something.”  And considering the fact that they are going to make their money by identifying overpayment or underpayments, we can assure you they're going to find it.

Who performs these audits?

Well, in theory, qualified auditing personnel, certified coders, et cetera. There's even supposed to be a medical director involved. We'll have to wait and see if that actually turns up to be true.

What techniques do they use?

Well, basically, two. They have the automated reviews where they just go through and look at your medical coding claims and look for things that are unusual, different, repeated medical codes, et cetera. Then they have the complex reviews where they actually go into the record and judge whether or not you've done what you did appropriately in the appropriate setting under the appropriate circumstances, et cetera. And those of course, become much more complex.

How is CMS involved in this process?

This is CMS' program. Now, CMS also does coordinate what the RACs are doing with other audit entities. In other words, the DOJ does some audits.

The OIG does audits. Your Medicare contractor does audits. We have the CERT program. There's all kinds of stuff going on out there except for the fact that the RACs will come virtually to everybody, particularly hospitals. You're definitely going to get hit one way or another.

Are the Medicaid programs doing the same thing? And we could even extend that to private third party payers. There are some private third party payers that are doing things that are not dissimilar.

Do the RACs look mainly at hospitals?

Based upon the demonstration project, the answer is yes. However, they're going to look at any healthcare provider that is paid based upon a fee per service basis, i.e. traditional Medicare for lack of a better term

So they're going to be looking at everybody but it is the hospitals that are going to get hit the hardest. And RACs realized that the deep pockets out there are the hospitals, for better, for worse as our expert mentioned in a health system conference.

Now, they're going to get to the clinics and they're going to get to the physicians and they're going to get to the skilled nursing facilities. Don't worry. They will get to you. It may take a while. And of course, you should anticipate that this RAC process is going to go on for years. This is going to go on for years.

Can the RACs use extrapolation?

Extrapolation is where they do an audit in the small set of claims, take the results from that healthcare audit and then extend - or the technical term is extrapolate it to a much larger universe.

A little healthcare training example in the hospital would be the hospital technical component of the -25 modifier. Now the DOJ is currently doing studies in this area in Western Pennsylvania and yes they are claiming that they have found high error rates. So, without a doubt, the RACs will also look at the -25 modifier and that would be certainly an area that would be amenable to this extrapolation as per healthcare guidelines.

Stay on the top of your medical compliance issues RAC audits with expert RAC audio conferences at AudioEducator.

Our Accreditation Partners
Facebook Twitter Linkedin Youtube RSS Feeds Google Plus
Audio Educator


Dear Valued Customers


We regret to announce that ProEdTech LLC and all its affiliate brands will cease operations on April 1, 2019.


We are no longer able to fulfill online orders. We will fullfill all DVD and book orders already placed.


Customers of canceled webinars and subscription products may request a refund at (800) 223-8720 or You must do so by April 1, 2019.


Thank you for your business and loyalty over the years. We sincerely apologize for any inconvenience caused.


Best regards,

The ProEdTech Team