What To Do If You're Sent To the RAC

We recently wrote about the Federal False Claims Act, 31 U.S.C. §§ 3729 – 3733 (“FCA”), and the ways it might affect physicians or other healthcare professionals who treat patients covered by Medicare, Medicaid, or any other program which is paid for, in whole or in part, by Federal Government funds. However, there is another pitfall which may arise for such providers, which poses its own set of problems and might even result in the filing of an FCA case. This other pitfall is the RAC investigation or audit.

Medicare and Medicaid programs are administered by the Centers for Medicare & Medicaid Services (“CMS”), which contracts with Recovery Audit Contractors (“RACs”). The RAC’s primary function is “program integrity.” This mostly involves the investigation of claims submitted by healthcare providers to detect fraudulent submissions, in the form of overbilling, over-utilization, improper coding, lack of back-up in charts, and just outright billing for services never actually rendered.

One of the tools RACs use is computer analytics to identify anomalies in submissions and “outliers.” If your billing triggers a “red flag” from one of these computer programs, you will be targeted for further review and most probably an audit (RACs also periodically send out random requests for record reviews which have not been specifically targeted as potentially fraudulent). Audits look at patient charts to verify the information in the chart matches the services or patient encounters billed to Medicare or Medicaid (and remember, if it isn’t in the chart, in the eyes of the RAC it DID’T HAPPEN).

The RACs often use “extrapolation” – projection of problems which occur in a few instances across the entire universe of a provider’s claims. If such extrapolation is not based upon a statistically random sample (and many are not, even though they are supposed to be) it can make a provider’s billing appear to be much worse than it actually is. Such reviews may result in demands for return of overpayments, penalties, and debarment from participation in Federal programs, as well as potential liability under the FCA. If you receive a record review or audit letter from a RAC, it is of utmost importance that you contact competent healthcare counsel as soon as possible upon your receipt of such a letter. If you would like a consultation on this, or any legal matter, do not hesitate to contact Scaringi Law at 717-657-7770.