What Every CEO should Know About Medicare's Recovery Audit Contractor Program (Trends) (Chief Executive Officer‪)‬

Under the Affordable Care Act, President Obama expressed his support for the use of "high-tech bounty hunters" to help fight healthcare fraud in the Medicare and Medicaid programs (US Government 2010). President Obama was referring to the recovery audit contractors (RACs) employed by Medicare, tasked to identify and correct improper Medicare payments. Contractors are highly incentivized to identify payment errors as a result of their contingency-based compensation arrangements. RACs' contingency rates range from 9 to 12.5 percent and are based on the principal amount recouped from or refunded to the provider or supplier. The fiscal landscape in healthcare today is severely overburdened by a litany of varying payment schemes, preadmission certification criterion, and regulatory mandates. In keeping up with these requirements, providers manage the deluge of third-party audits, all simultaneously requesting information (Blue Cross Blue Shield of Massachusetts 2009). The RAC can request up to 10 percent of Medicare discharges, but never more than 300 medical records (in certain cases, up to 500) every 45 days. Keeping abreast of the various cycles of audit and deadlines required to preserve the right of appeal is an arduous task, and while Medicare RACs continue to ramp up, providers prepare for a new wave of Medicaid and insurance company RAC audits.