Audits

When dermatologists are audited, it’s usually by a recovery audit contractor (RAC). A RAC audit involves finding and correcting overpayments that have already been made. 

The basis for a RAC audit: There is a method to the madness

There are four RACs, each of which are assigned a specific region of the country. Each RAC has their own custom-designed computer programs and processes for completing audits, but they are all based on Medicare rules and regulations, accepted clinical standards of medical practice, and coding and billing policies. They can also reference specific services listed in the current year of the Office of the Inspector General work plan, as well as Government Accountability Office and Comprehensive Error Rate Testing findings.

RACs identify situations in which claims have a high probability of being over- or underpaid in their region. They enter these situations into the RAC database for each claim to identify providers to audit and begin the auditing process.

The RACs may perform an audit if they find that you billed for non-covered services or did not follow coding rules and conventions correctly.

RACs have limitations

RACs can audit physicians, providers, facilities, and suppliers — anyone who submits claims. Fortunately, while they can audit basically anyone, there are limits on the number of records they can request per practice based on the practice size.

• Solo practitioner limit = 10 medical records/45 days

• Partnership of 2 to 5 individuals limit = 20 medical records/45 days

• Group of 6 to 15 individual limit = 30 medical records/45 days

• Large group (16+) limit = 50 medical records/45 days

These limits ensure that the audit won’t put an undue burden on your practice’s efficiency. To offset the cost to the practice for submitting records, RACs are required to reimburse providers for photocopying records — up to 12 cents per page — and must reimburse within 45 days of receiving the record.

You can appeal a RAC finding

You can also appeal a RAC finding. Appeals may be sent in writing to the RAC contractor within 15 days of receiving the letter identifying an overpayment. You will need to refer to the Medicare policy, statute, or medical record documentation that refutes the reason for denial. For more information on writing an appeal letter visit Appealing an audit.

* Note: The appeal process is the same as it is for regular Medicare appeals. However, the RAC will not review a claim that’s already been reviewed by any another entity.

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