What Is the RAC Demonstration Program?
The RAC demonstration program represents the first time that Medicare has paid a contractor on a contingency fee basis for claim review work. To avoid potential conflicts of interest, current Medicare contractors have been prohibited from being named RACs. Nonetheless, in order to be named RACs, selected contractors are required to have experience performing recovery audit work for Medicaid state agencies, private insurers, healthcare providers, or plans. Although providers are acutely familiar with the examination of claims by fiscal intermediaries (FIs) and other government contractors, the examination of claims data by RACs has added yet another layer of review. RACs have been given great latitude in determining both who and what will be examined, and it appears that the individual RACs in each of the demonstration states have focused on specific areas of care (“Demonstration to Work Toward Assuring Accurate Medicare Payments,” CMS press release, March 28, 2005). The Reported Result
