Recovery Audit Contractor (RAC) Activity Up in Hospitals Across the Country

Monday, March 18, 2013

By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

Hospitals across the country are being hammered by Recovery Audit Contractors (RACs). According to a survey by the American Hospital Association, RAC activity soared during the fourth quarter of 2012. The March 8, 2013, report explores the impact of the RAC program on the 1,233 hospitals that participated in the survey, according to an article on Healthcare IT News.

Click here to read the article from Healthcare IT News.

Highlights from the Survey.

1.  Ninety percent (90%) of hospitals that participated in the survey experienced some level of RAC activity during the fourth quarter of 2012.

2.  Cumulative claims denied reached $1.3 billion, which is up from $1.1 billion at the close of the third quarter.

3.  Three-quarters of the respondents said the number one reason for complex denials in the fourth quarter was the medically unnecessary short stay, followed by inpatient coding errors.

4.  Hospitals reported appealing more than forty percent (40%) of all RAC denials, with a seventy-two percent (72%) success rate.

5.  Nearly three-fourths of all appealed claims are still stuck in the appeals process.

Click here to read the complete survey results.

What is a RAC?

RACs are often referred to as “bounty hunters.” They are private companies contracted by the Centers for Medicare and Medicaid Services (CMS), used to identify Medicare overpayments and underpayments, and return Medicare overpayments to the Medicare Trust Fund. The RAC for region C, which includes Florida, Puerto Rico and the U.S. Virgin Islands, is Connolly Healthcare, Inc.

How to Prepare for RACs.

Although you may speak of a "routine" Medicare audit, there is really no such thing. This is like saying you have a "routine IRS audit." The fact is that there is some item you have claimed as a Medicare provider or the amount of claims Medicare has paid in a certain category that has caused you or your practice to be audited.

I previously wrote a blog highlighting some of the actions we recommend you take in responding to a Medicare audit. The most important step you should take is to consult an experienced health law attorney early in the audit process to assist in preparing the response.  Click here to read more on how to respond to a Medicare audit.

RAC Audits Are Here to Stay.

It’s important to keep in mind that RAC audits are not going away. It has become common for state and federal regulators to enforce even the smallest violations, resulting in investigations, monetary fines and penalties. If found in violation, you will not only have to pay fines and face disciplinary action, you will also lose revenue because you will have to spend time dealing with the investigation, instead of practicing medicine. Whether you are trying to prevent Medicare and Medicaid audits, Zone Program Integrity Contractor (ZPIC) audits, or any other kind of healthcare audits, there are steps you can implement in your practice today that may save you down the line. Click here to read more on self audits.

Contact Health Law Attorneys Experienced in Handling Medicaid and Medicare Audits.

The Health Law Firm's attorneys routinely represent physicians, medical groups, clinics, pharmacies, hospitals, durable medical equipment (DME) suppliers, home health agencies, nursing homes and other healthcare providers in Medicaid and Medicare investigations, audits and recovery actions.

To contact The Health Law Firm please call (407) 331-6620 or (850) 439-1001 and visit our website at


What do you think of this increase in RAC activity? Are you prepared in the event of a RAC audit? Please leave any thoughtful comments below.


Manos, Diana. “Hospitals Hammered by RAC Audits.” Healthcare IT News. (March 12, 2013). From:

Shinkman, Ron. “Hospitals Face Increased RAC Activity, Denials.” Fierce Health Finance. (March 12, 2013). From:

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone:  (407) 331-6620.

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The Health Law Firm" is a registered fictitious business name of George F. Indest III, P.A. - The Health Law Firm, a Florida professional service corporation, since 1999.
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