discussion board replies- Masters level

Each reply must be at least 450 words. Each thread and reply must contain at least 2 references and 1 instance of biblical integration. Current APA format must be used.

classmate #1-

Our textbook explains that the Recovery Audit Contractor project otherwise known as RAC can be defined as the system that is accountable for identifying and correcting incorrect Medicare payments (Harrington, 2016). One author explains that RAC’s goal was to “to reduce improper payments by identifying and collecting over payments, identifying underpayments, and implementing actions to prevent improper payments in the future” (Good, 2009, p. 46). The Recovery Audit Contractor project was created and implemented by the Centers for Medicare and Medicaid Services or CMS (Harrington, 2016). On a regular schedule, the Finance Department and Health Information Management Department in a health care facility is asked to provide the RAC with charts for an audit (Harrington, 2016). These audits investigate underpayments or over payments to Medicare with the intention of preventing similar mistakes from occurring in the future (Harrington, 2016).

According to one article, the Recovery Audit Contractor program was enacted by Congress through the Department of Health and Human Services in 2003 with a three year plan to identify and correct all incorrect payments made to Medicare (Scott, & Camden, 2011). This was created first as a three year plan to determine if the process did in fact identify and correct improper payments with the end goal of protecting Medicare services (Scott, & Camden, 2011). According to the authors, the program was able to identify over one billion dollars in over payments (Scott, & Camden, 2011). With this successful three year program, Congress mandated that the Recovery Audit Contractor program be implemented permanently nationwide (Scott, & Camden, 2011).

The text book explains that since this program was implemented, improper payments have decreased by 9.8 percent in 2003 and 3.9 percent in 2007 (Harrington, 2016). Additionally, the text book explains that “approximately 3.9 percent of the Medicare dollars paid out to providers did not comply with one or more of the Medicare payment rules” (Harrington, 2016, p. 288). With 3.9 percent of payments equating to almost 11 billion dollars, we can see why the creation of RAC was absolutely necessary (Harrington, 2016).

As you can see, having a program such as RAC in place is extremely important to our health care system and its organizations. Over payments or underpayments can affect the future of both Medicare and health care providers. By having a system in place to monitor and identify payment issues will help our health care system to be able to continue to provide services to people in the future.

A quote that my boss likes to say states that “Mistakes have the power to turn you into something better than you were before”. I believe that this relates perfectly to this discussion board topic. Through realizing the mistakes that were being made with billing, we have been able to make the health care system even better than it was before. The bible states in Philippians 3:13, “Brothers and sisters, I know that I still have a long way to go. But there is one thing I do: I forget what is in the past and try as hard as I can to reach the goal before me”. As health care professionals, we should realize our mistakes and allow them to help us to reach our goals.


Good, B. (2009). Medicare recovery audit contractor update. West Virginia Medical Journal, 105(3), 46.

Harrington, M. (2016). Health care finance and the mechanics of insurance and reimbursement. Burlington, MA: Jones & Bartlett Learning.

Scott, J., & Camden, M. (2011). Recovery audit contractor medical necessity readiness. Professional Case Management, 16(5), 232-237. doi:10.1097/ncm.0b013e31821ac720

classmate #2-

For a provider, there are few things that stress them out more than a RAC audit (Recovery Audit Contractor). In the industry, these are commonly pronounced “rack” audits. Working in the DME industry the RAC audit is commonplace, and it is expected at least once in a quarter. The reasoning behind this is RAC audits typically follow the recommendations of the Office of the Inspector General of the General Accounting Office for CMS (Harrington, 2016, pp. 287-291). These recommendations are formed on determined issues across the country and throughout all providers for specific billing codes. For instance, if there were a sudden mishap with CMS where a large selection of claims with a full electric bed made it through and was paid as a purchase instead of rentals even though no purchase option letter was signed by the patients, this would constitute a RAC audit.

The history and purpose of the recovery audit contractor is to review the selection of billed claims and determine how many by percentage pass the checklist used to determine if the claim paid correctly, or if a “take back” is necessary. If the selection returns a large enough percentage of claims marked for “take back” (claims that should not have been paid, and now CMS wants the money back), then they look at a larger selection of previously paid claims (Squire, 2015, p. 219). Eventually, the RAC auditor will turn to something called the extrapolation method to determine how much money over a specific timeframe needs to be taken back by CMS. This is done to catch mistakes that lead to mistaken payments and to set in motion a plan to put the funds back into the system (CMS.gov).

These improper payouts do not always occur because of malevolent billing practices (see the example above). Many times the payouts arise because of a system issue or policy changes that were not implemented at the CMS level. Unfortunately, it is always the provider that takes the hit for this. RAC audits never occur because of underpayment. Instead, CMS will release a Medicare Learning Network (MLN) Matters article alerting providers to the underpayment issue and telling them how to remedy the problem. If the provider does not, then there will be no reimbursement on the part of CMS for the underpaid claims.

If the RAC audit finds claims that should be paid back, the provider has two options. In the first, they can pay directly and immediately. Most providers do not have large sums of money on hand, for those that end up owing CMS beyond what they can payout immediately, there is a second option. CMS will recover the money owed through future payments to the provider. This is done by taking a portion of the payment and keeping it until the total amount owed is paid back in full. These withheld payments (Recoupments) are reflected on the provider’s copy of the explanation of benefits (EOB) that accompanies each payment or electronic fund transfer (EFT) (Squire, 2015, pp. 225-226). The impact on healthcare organizations is immediately apparent. The more a RAC audit produces the necessity to take back payments, the more an HCO will be audited (Squire, 2015, pp. 219-221). Less money means less profit and the ability to grow as a business is severely hindered. It is imperative that healthcare providers and organizations have capable people employed that are trained in good billing practices and continually trained in the CMS changes that are released twice a year. This move will directly affect the company’s profit margin and give the business a fighting chance with the government shows up to help. “Therefore let him who thinks he stands take heed that he does not fall” (1 Corinthians 10:12, NASB). Vigilance is crucial for any healthcare administration expert. There is never a time to be asleep at the wheel, most especially when it concerns the reimbursement of claims. Practice the standards that collect payment, do not start trends that cost money.


Harrington, M. K. (2016). Health care finance and the mechanics of insurance and reimbursement. Burlington, MA: Jones & Bartlett Learning.

Medicares-Recovery-Process. (2018, April 30). Retrieved from https://www.cms.gov/Medicare/Coordination-of-Benef…

Squire, M. (2015). RAC: A Program in Distress. Brigham Young University Law Review,2015(1), 219-256.

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