Revenue Cycle

RACs and Medicare Advantage

Recovery Auditor Report, May 28, 2009

Q: Are the Medicare Advantage plans included in RAC audits?

A: According to Section 306 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Medicare Advantage plans are not included in RAC audits. They are exempt from the RAC program, as the RAC is focusing on Part A & Part B providers.
 
According to the RAC Status Document FY 2006:
Section 306 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (see Appendix A) directs the Secretary of the U.S. Department of Health and Human Services (HHS) to demonstrate the use of Recovery Audit Contractors (RAC) in:
1)       Identifying Medicare underpayments and overpayments; and
2)       Recouping Medicare overpayments.
 
Under the demonstration, the Centers for Medicare & Medicaid Services (CMS) pays the RACs on a contingency basis; that is, the RACs receive a portion of what they identify and collect. The demonstration program is 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 Medicare providers and to ensure that taxpayer funds are used for their intended purpose. The legislation requires the Secretary to conduct the demonstration for payments made under part A or B of Title XVIII of the Social Security Act (i.e., traditional fee-for-service (FFS) Medicare). Thus the RAC demonstration does not include the audits of payments for Medicare Part C (managed care) or Part D (the prescription drug benefit).
Editor’s note: Stacey Levitt, RN, MSN, CPC, director of patient care management at Lenox Hill Hospital in New York City answered this question.

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