By Marian Howe  

Recovery. Audit. Contractor. Those three words are striking fear into managers' hearts in hospitals across the country. Yet although the recovery audit contractor (RAC) process may be financially terrifying, the RAC preparation process need not be. Here are some ideas to consider when creating your facility's RAC team.
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Change the Paradigm

The RAC process is one way for the federal government to find enough money to continue funding Medicare and Medicaid programs. Because the number of beneficiaries subscribing to Medicare will increase as Medicare funds diminish, the federal government must recoup money that has been spent when it should not have been. RACs are here, and they are-in one form or another-probably here to stay. Rather than waste energy wishing away the RAC process, spend your time and efforts on accepting their presence and moving forward with a new clarity and commitment to "getting it right."

Recognize the Relativity

Although the RAC review program seems troublesome, it is truly just another ongoing audit. Do not fall prey to marketing strategies that build RACs into something they are not. As with any other audit process, your facility can be in control. Although outsourcing your "RAC attack" functions may seem to be a wise choice for your facility, do not make this decision out of fear or panic. Most organizations have staff who are capable of managing the RAC process if given proper tools and encouragement.

Educate Yourself

Plenty of web sites and publications have dedicated themselves to selling you information about RACs and telling you that you are incapable of gathering all you need without assistance from them. Know that all necessary information about RACs can be obtained free of charge. Before making a sizeable financial outlay, take advantage of information that is already available and educate yourself. If you haven't already started analyzing the RAC process, spend a few hours sorting through the many federal and state publications available on the subject. After a relatively short time, you will realize that the publications contain the same information in different formats. Subscribe to two or three good listservs that offer solid RAC information, and stick to those. Check the Centers for Medicare & Medicaid Services web site weekly for RAC updates.

Pick Your Team

The smaller the team, the better, but make sure all the team members are interested in making certain all the T's are crossed. You want detail-oriented self-starters who commit to awareness and timely follow-up in their daily tasks.

The team should be composed of two sections: the oversight section and the tactical section.

The oversight section. This group-which might consist of the CFO, chief compliance officer), and business office manager-should meet monthly to review work performed by the tactical section. Oversight watches over the entire process, creates internal benchmarks, and answers to the CEO and the board.

The tactical section. This group works in the trenches, creating and managing the step-by-step calendar, database, and appeals.

This group should meet at least every other week (either face-to-face or electronically) and share a computer application that allows them to communicate quickly and confidentially about their RAC work status. Members of this group should consist of a senior coder and representatives from the medical records department, case management/utilization management, and the business office. The tactical group leader should be well organized and possess excellent communication skills.

Only one or two of the group's members should be able to manipulate the database, which should include at least the following information:

  • Date RAC request for information is received
  • Patient account number
  • Date of patient service
  • Amount paid by Medicare
  • Date requested information was sent
  • Who sent the requested information
  • Date by which a request for reconsideration must be made
  • Date by which an appeal should be made
  • Date results of the reconsideration become available
  • Date results of the first appeal become available
  • Date by which a second appeal must be made
  • Date second appeal is made
  • Date results of second appeal become available
  • Date by which third appeal must be made
  • Date third appeal is made
  • Date results of third appeal become available

The outcome of each appeal should also be incorporated into the database, but how this is accomplished in your facility will be up to your tactical group.

Every month, the oversight group should receive an updated copy of the database, with pertinent information highlighted. How often the oversight group meets with members of the tactical group is up to the organization. If the tactical group encounters challenges with the team
process or the work itself, however, both groups should meet quickly and solve problems rapidly. Do not allow small kinks in your internal process to become roadblocks. Solve problems now.


If you habitually up-code, routinely admit patients who do not demonstrate medical necessity, and have sloppy billing practices, you have reason to worry. But if your organization has been making every effort to code correctly, document thoroughly, and generally do the right thing in terms of billing, then RACs are most likely not the end-all and be-all of your reimbursement world. Take a deep breath. We're all in this together.

Marian Howe, RNC, CRM, is utilization management coordinator, Summit Healthcare Regional Medical Center, Show Low, Ariz. ( 

Resources for the Recovery Audit Contractor (RAC) Program

The following resources may be helpful in preparing for the RACs.

The Centers for Medicare & Medicaid Services web site ( provides access to all you need to know: legislation,  scope of work, NCDs, your region's RAC contact information, and sign-up for RAC e-mail updates. Bookmark chapter four of the CMS claims processing manual, and read through the CMS Manual System Pub 100-04 Medicare Claims Processing, Transmittal 1745, for information on specific outpatient prospective pricing system policies. In your browser, enter "Quality Improvement Organization Manual" to learn about denials, reconsiderations, and appeals.

CMS rulings can be found at; forms for appeals can be found at

The American Hospital Association offers RACTrac Member Advisory publications online at

Read the presentation "The Basics of Preparing for and Responding to RAC Demands" by Kathy Skrzypczak, assistant vice president for corporate services at Martin Memorial Health Systems, based in Stuart, Fla., for ideas on what one hospital is doing. The presentation is from The National Medicare RAC Summit, held March 5-6, 2009. Additional summit presentations are available at

Contact your Medicare administrative contractor with any Medicare or RAC questions, and always remember to utilize any consultants or auditors your hospital already has under contract.

Publication Date: Sunday, November 01, 2009