100-08 Medicare Program Integrity Manual: Chapter 9 - The Medicare Fee-for Service (FFS) Recovery Audit Program

Medicare Program Integrity Manual
Chapter 9 – The Medicare Fee-for-Service (FFS)
Recovery Audit Program
Table of Contents
(Rev. 12772; Issued: 08-09-24)
Transmittals for Chapter 9
9.1 – Medicare FFS Recovery Audit Program
9.2 – Communication with Recovery Audit Contractors (RACs)
9.2.1 – RAC Points of Contact
9.2.2 – Applications to Assist Communication
9.2.3 – RAC/MAC Communication
9.2.4 – Referral to the UPIC
9.2.5 – Joint Operating Agreement
9.2.6 – Provider Information
9.3 – Overview of the RAC Process
9.4 – Inputting Suppression and Exclusion Cases to the RACDW
9.5 – Adjusting the Claim
9.5.1 – Tracking Overpayments and Appeals
9.5.2 – Underpayments
9.5.3 – Error Files
9.5.4 – Closure/Retraction Files
9.6 – Extended Repayment Schedule Requests Received on a RAC Initiated
Overpayment
9.7 – Appeals Resulting from RAC Initiated Denials
9.8 – Referrals to the Department of the Treasury
9.9 – Reporting Administrative Costs Directly Associated with the RAC Program
9.10 – Potential Fraud
9.11 – MAC Requirements Involving RAC Information Dissemination
9.12 – Voluntary Refund
9.13 – Working with RAC Support Contractors
9.14 – Receivables Initiated by the RAC as Independent Audit Accessible Information
9.15 – MAC Participation in the Review Approval Process

9.1 – Medicare FFS Recovery Audit Program
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
Section 1893(h) of the Social Security Act (the Act) requires the Secretary of the
Department of Health and Human Services (the Secretary) to utilize Recovery Audit
Contractors (RACs) under the Medicare Integrity Program to identify underpayments and
overpayments and recoup overpayments under the Medicare program associated with
services for which payment is made under part A or B of title XVIII of the Act. The term
RAC, as used in this section, refers to the Fee-For-Service (FFS) RACs.
In 2009, CMS expanded the use of RACs nationwide. Information on the program can be
found at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-
Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/
The RACs are responsible for identifying improper payments. The Medicare
Administrative Contractors (MACs) are responsible for the adjustments of these claims.
9.2 – Communication with Recovery Audit Contractors (RACs)
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
When Contractors have questions regarding the Recovery Audit Program or their
interaction with a RAC, they should contact the CMS RAC COR and applicable RAC
contact.
9.2.1 – RAC Points of Contact
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
All MACs shall provide the CMS RAC COR the name, phone number, address, fax
number, and email address of a primary point of contact (POC) and an alternate POC.
The point of contact or alternate will be responsible for all communications with the
CMS Contracting Officer Representative (COR) and the RAC. The POC will be
contacted to handle improper payment issues such as offsets, claim processing issues,
provider address information, status of claim adjustments and status of appeals. In
addition, the contractor shall provide the CMS RAC COR with the name, phone numbers,
addresses, fax number and email address of a medical review POC to handle such issues
as local edits, provider education, and Local Coverage Determinations (LCDs), and other
corrective action.
9.2.2 – Applications to Assist Communication
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The Recovery Audit Contractor Data Warehouse (RACDW) is an online tool that has
been developed to track all RAC activity, as well as, other review contractor activity. For
access to the RACDW, email the CMS contact at RAC@CMS.HHS.gov.

9.2.3 – RAC/MAC Communication
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The MACs shall work with the RAC to develop a communication process. This process
shall be flexible and shall be reached by a mutual agreement. CMS has several items to
assist in the communication efforts:
• 	RACDW
• 	Indicator Code of RAC Identified Overpayments
• 	System Generated Flat File of all A/R transactions on a daily basis
• 	Mass Adjustment Process
• 	CMS Secure Email
NOTE: Unless prior approval has been given by CMS, Personal Health Information
(PHI) shall not be transferred over the internet, or via email. PHI may be transmitted via
fax, telephone, mail pager, or CMS secure email.
9.2.4 – Referral to the UPIC
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
RACs that refer a complaint to the UPIC shall notify the UPIC via e-mail that a
complaint is being referred as potentially fraudulent. The RAC shall develop a referral
package (see below for what should be included in the referral package) for all
complaints being referred to the UPIC and shall send the complaint via a secure method
such as e-mail or mail directly to the UPIC. Complaints shall be forwarded to the UPIC
for further review under the circumstances listed below (this is not an exhaustive list):
• Claims may have been altered
• Claims have been up-coded to obtain a higher reimbursement amount and
appear to be 	fraudulent or abusive;
• Potential misrepresentation with respect to the nature of the services rendered,
charges 	for the services rendered, identity of the person receiving the services,
identity of persons 	or doctor providing the services, dates of the services, etc.;
• Alleged submissions of claims for non-covered services are misrepresented as
covered 	services, excluding demand bills and those with Advanced Beneficiary
Notices (ABNs);
• Claims involving potential collusion between a provider/supplier and a
beneficiary 	resulting in higher costs or charges to the Medicare program;
• Alleged use of another person’s Medicare number to obtain medical care;
• Alleged alteration of claim history records to generate inappropriate payments;
• Alleged use of the adjustment payment process to generate inappropriate
payments; or
• Any other instance that is likely to indicate a potential fraud, waste, and abuse
situation.

NOTE: Since this is not an all-inclusive list, the UPIC has the right to request additional
information in the resolution of the complaint referral or the subsequent development of a
related case (e.g., provider/supplier enrollment information).
When the above situations occur requiring that the complaint be referred to the UPIC for
review, the RAC shall prepare a referral package that includes, at a minimum, the
following:
• Provider/supplier name, NPI, provider/supplier number, and address.
• Type of provider/supplier involved in the allegation and the perpetrator, if an
employee 	of the provider/supplier.
• Type of service involved in the allegation.
• Place of service.
• Nature of the allegation(s).
• Timeframe of the allegation(s).
• Date of service, procedure code(s).
• Beneficiary name, beneficiary HICN, telephone number.
NOTE: Since this is not an all-inclusive list, the UPIC has the right to request additional
information in the resolution of the complaint referral or the subsequent development of a
related case (e.g., provider/supplier enrollment information). The RAC shall maintain a
copy of all referral packages.
9.2.5 – Joint Operating Agreement
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
All MACs and UPICs shall develop a Joint Operating Agreement (JOA) with each RAC
in their jurisdiction. The JOA shall be mutually approved by all contractors and by CMS
prior to its effective date. The JOA shall cover all requirements in this Internet Only
Manual (IOM), but may expand upon those requirements and may provide alternative
timeframes. The JOA shall include communication processes and timeframes for
adjustments, recoupments, appeals, inquiries, and receipt of provider names and
addresses.
9.2.6 – Provider Information
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
All MACs shall provide the RAC with a list of all provider numbers, names, addresses,
and tax identification number from their jurisdiction. At a minimum, the contractor shall
update the list every six months. The method and frequency of transfer shall be included
in the JOA.

9.3 – Overview of the RAC Process
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
Upon contract award, the RACs will receive a data file from CMS containing National
Claims History (NCH) data about claims that have been processed by the MACs in the
appropriate jurisdictions based on the RAC contract. The RACs will receive monthly
updated NCH data files. RACs will enter individual claim information into the RACDW
for each claim under review. Assuming a provider or claim(s) has not been excluded or
suppressed due to a previous medical review, fraud investigation or inclusion in the
Comprehensive Error Rate Testing (CERT) sample, the RAC will continue with their
review process.
The CMS may grant the RAC “read only” access to the Common Working File (CWF)
(and any other systems at CMS’ sole discretion) to obtain additional information
pertaining to potential improper payments.
9.4 – Inputting Suppression and Exclusion Cases to the RACDW
(Rev. 12772; Issued: 08-09-24; Effective: 09-20-24; Implementation: 09-20-24)
The MAC, Supplemental Medical Review Contractor (SMRC), CERT, and Unified
Program Integrity Contractor (UPIC) shall input all claims requiring suppression and
exclusion into the RACDW. An exclusion is the permanent removal of a claim due to a
previous review. A suppression is a temporary removal of a claim to an ongoing case
development. The UPIC shall refer to their specific suppression and/or exclusion
requirements in IOM-100-8 Chapter 4. The MAC can permanently exclude an individual
claim or a series of claims, or suppress a provider’s claim submission for a particular
claim type for a period of time not to exceed one calendar year.
The following cases require exclusion:
• 	A medical review is in progress; or claims subjected to post payment review;
• 	Claims subjected to prepayment medical review;
• 	Claims originally denied and later paid by an appeal entity
The following cases require suppression:
• 	A fraud/program integrity review is in progress;
• 	The MAC or UPIC has been notified by an outside agency (law
enforcement, Office of Inspector General (OIG), Department of Justice
(DOJ)) that an investigation is ongoing.
The MACs shall not suppress or exclude claims that do not meet the above criteria.
Claims on which the MAC is conducting education should not be suppressed.

The MACs shall enter suppression and/or exclusion records immediately after the need
for these actions are identified. After the initial data input, contractors shall consistently
monitor the RACDW and update on an as needed basis.
The MACs shall keep documentation on file that supports the information they added to
the RACDW.
NOTE: The suppression or exclusion of an entire provider will require CMS approval.
Additional direction can be found in the Medicare Program Integrity Manual (MPIM),
Publication 100-08, Chapter 3, Section 3.5.2, and Chapter 4, Section 4.7.4.
9.5 - Adjusting the Claim
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The MAC shall process RAC-initiated overpayments the same as any overpayment
determined by the MAC.
The RAC shall submit claim adjustments directly to the Virtual Data Centers (VDCs) via
the file-based mass adjustment process. Manual adjustments shall be limited to those that
cannot be accommodated through more automated means. The MAC shall identify the
origin of any manual adjustments by assigning RAC adjustment reasons and/or discovery
codes as appropriate.
The MAC shall create an accounts receivable in accordance with the guidelines in the
Medicare Financial Management Manual (MFMM), Publication 100-06, Chapter 4,
Sections 20 and 80. The MAC shall issue all demand letters for any RAC identified
overpayment, following the same process as for any other payment recoupment. The
MAC shall include the initiating RAC’s name and contact information in all demand
letters. The MAC shall be responsible for fielding any administrative concerns related to
the claim adjustment, such as, the issuance of demand letters, timeframes for recoupment
and the appeals process. The RAC shall be responsible for any audit specific
communications, such as reviewer rationale inquiries and discussion requests.
9.5.1 - Tracking Overpayments and Appeals
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The RAC shall enter the required information into the RACDW and provide updates
throughout the claims review process. The MAC shall upload all applicable adjustment
outcome files into the RACDW on a daily (business day) basis. The MAC shall forward
Health Integrated General Ledger Accounting System (HIGLAS) outcome/transaction
files, if files are not sent in an automated fashion and shall ensure that the VDC return the
appropriate Fiscal Intermediary Shared System/ Mandatory Claim Submission
System/Viable Information Processing Systems Medicare System (FISS/MCS/VMS)
files directly. Any MAC unable to meet such requirements in the required timeframe
shall communicate with the CMS COR regarding the surrounding circumstance and the
potential for alternate instruction.

The RAC shall notify the MAC of any files that the RAC did not receive from the VDC
so the MAC can try to assist with the transfer of these files.
The MAC shall not make adjustments on RAC-initiated zero dollar claims unless the
MACs are contacting the provider to notify them of a new denial reason.
9.5.1.1 - Tracking Appeals and Reopenings
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
Appeals and reopenings requests received in response to a RAC initiated improper payment
shall be tracked. The status of any appeals shall be tracked through all available levels of the
appeal process.
MCS and VMS contractors shall upload the weekly appeals report created in the standard
systems to the RAC Data Warehouse no later than 2 business days after the end of the
business week (typically Friday).
FISS contractors shall complete the supplied Excel spreadsheet, see CR 7458, when reporting
monthly appeals and reopenings information. The MAC/Contractor shall upload the Monthly
Recovery Auditor Appeals and Reopenings Report to the RAC Data Warehouse by the 15th
business day of each month. Questions concerning upload of the file can be sent to the RAC
Data Warehouse Help Desk. The report shall include the prior month’s information and a
copy shall be provided by email to the appropriate Recovery Auditor and the MAC COR.
NOTE: CMS is in the process of modifying the Medicare Appeals System (MAS) to track
first level Part A appeals. The implementation of MAS will occur individually. However,
MACs shall continue to run and upload the MAS report to the RAC Data Warehouse.
The MAC/Contractor shall include the additional tracking information supplied on the Excel
monthly appeals and reopenings report. The MAC/Contactor shall record on the tracking
report the rationale for the reversal. Reasons for Reversal Codes have been created and if one
of the given codes is not appropriate, a narrative explanation shall be input.
The MAC/Contractor shall research, fix and upload within 15 calendar days of notification
all errors, including claims that do not get uploaded to the RAC Data Warehouse.
9.5.2 – Underpayments
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The MAC shall process all underpayments using the mass adjustment process whenever
possible. The MAC shall upload a transaction file into the RACDW that includes the
required information on the underpayment reimbursement to the provider.
9.5.3 – Error Files
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)

The CMS established RAC workload limits for maximum number of claim adjustments
the RAC shall send to the MAC in a calendar month. It is assumed that the majority of
adjustments will be processed through the mass adjustment system. In some cases, claims
submitted through the mass adjustment system cannot be processed due to a submission
error and are identified on an error report. The RAC shall review the report, make the
necessary changes, and resubmit the claim. In these situations, the MAC shall not count
claims identified on error files, corrected and resubmitted by the RAC in the same month
against the monthly workload twice.
9.5.4 – Closure/Retraction Files
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The MAC shall cease adjustment activities upon written request from the RAC, including
evidence of any the CMS required approval, as applicable. This activity could occur prior
to the creation of the accounts receivable (AR). Activity could occur after creation of AR
but before offset. The RAC acknowledges that if the notification is not received prior to
the 36th day, offset will occur and RAC shall follow up with an adjustment file (same file
format).
The MAC shall change the offset flag to “N” on the RAC account receivable upon
written request from the RAC, including evidence of any CMS required approval, as
applicable. The MAC shall follow CMS requirements for repayment. The MAC shall
notify the RAC when the stop recovery actions are complete.
9.6 – Extended Repayment Schedule Requests Received on a RAC
Initiated Overpayment
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The MAC shall offer the provider the ability to repay the overpayment through an
Extended Repayment Schedule (ERS). If the RAC receives an ERS request from a
provider, it shall forward the request to the appropriate MAC for processing.
If the MAC receives an ERS from a provider for a RAC initiated overpayment, it shall
inform the appropriate contact at the RAC and upload a transaction file into the RACDW
for each ERS collection received. This process shall be included in the JOA’s. The MAC
shall refer to the MFMM, Publication 100-6, Chapter 4, Section 50.
9.7 – Appeals Resulting from RAC Initiated Denials
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The MACs shall process any appeals stemming from a RAC improper payment (e.g.
RAC decisions appealed by the providers or beneficiaries) as any other appeal request.
Upon receiving an appeal request for a RAC improper payment, the MAC shall request
the medical records and any other supporting documentation from the RAC. The
timeframes regarding requesting and receiving medical records from the RAC shall be

agreed upon in the JOA. Even if the MAC believes they have enough documentation to
make a determination on the appeal, the MAC shall still request the medical records and
any other supporting documentation, as providers may submit different documentation to
the RAC than to the MAC upon appeal.
The MAC shall utilize the same approach in denying an appeal request (i.e. reopening or
redetermination) as used with any other appeal request. For more information on to
determine whether an appeal request should be processed as a reopening or
redetermination, MACs shall refer to the Medicare Claims Processing Manual (MCPM),
Publication 100-04, Chapter 34, Section 10.
9.8 - Referrals to the Department of the Treasury
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
All overpayments identified by the RAC shall follow the normal referral to Treasury
process. The MAC shall issue the Intent to Refer letter following the normal process. The
MAC shall update the RACDW with the referral to Treasury status code once referral is
complete. If the MAC receives a question or dispute after referral that cannot be
answered through the case file, the MAC shall contact the RAC for assistance. The
communication process for the transfer of debt shall be agreed upon in the JOA.
9.9 - Reporting Administrative Costs Directly Associated with the RAC
Program
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
Section 302 of the Tax Relief and Health Care Act of 2006 allows CMS to pay for all
costs associated with conducting the RAC Program out of RAC collections. These costs
are not attributed to a contractor’s annual budget. These costs are only attributed to the
RAC Program and are paid from RAC collections. The CMS has created two activity
codes for the RAC program. The MAC shall use these codes for all activities related to
the RAC Program. Detailed descriptions of the activity codes and what may be included
are below.
Activity Code 11031 – RAC Implementation and Maintenance Activities
These duties include:
- Completion and maintenance of a JOA with the applicable RAC(s)
- Adjusting all claims identified by the RAC as containing an underpayment or an
overpayment
- Performing validation of overpayment identifications if requested by CMS
- Creating and maintaining accounts receivables for RAC identified overpayments
- Collecting and processing monies received for RAC identified overpayments
- Processing offset for RAC identified overpayments
- Performing necessary provider education relevant to the operation of the RAC program
if 	requested by CMS
- Creating exclusion files for upload to the RACDW
- Creating monthly/daily reports for upload to the RACDW

- Creating monthly/daily reports for feedback to the RAC
- Communicating with RACs and CMS
- Handling RAC related inquires
- Handling activities associated with withdrawing an overpayment not resulting from an
appeal
Activity Code 12031 – RAC Initiated Appeal Activities
These duties include:
- Performing and adjudicating the redetermination
- Reporting appeals statistics to the CMS RAC COR or delegate
- Handling inquiries from CMS regarding RAC-identified overpayments
- Attending meetings with the RAC and/or the CMS COR
- Handling records, notes and documents regarding RAC and Provider appeals
- Processing and tracking all appeals for RAC identified overpayments and creating
appeal reports for upload to the RACDW if requested by CMS
- Communicating with RACs and CMS
- Communicating with other appeal entities on RAC identified overpayment cases
Qualified 	Independent Contractor (QIC), Administrative Law Judge
(ALJ), Departmental Appeals Board (DAB)
9.10 - Potential Fraud
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The RAC shall refer any claims it determines to be a potentially fraudulent to their CMS
COR who will then forward this claim information to the appropriate area within CMS.
The RAC shall concurrently refer the claims to the OIG in accordance with the
memorandum of understanding (MOU).
9.11 - MAC Requirements Involving RAC Information Dissemination
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
When instructed by CMS, the MACs shall disseminate information concerning the RAC
program to the provider community. The MAC shall notify the RAC when any
community outreach and/or public education is taking place in their jurisdiction. If
attending, the RAC shall only address their function as RACs. They may NOT address
policy changes and/or provider education on other Medicare issues. It is also up to the
discretion of the MAC to invite the RAC to speak at the event. It is also up to the RAC if
it wants to attend the event. All information disseminated to the provider community
concerning the RAC Program shall be approved by the CMS COR. Information shall be
sent by email to the CMS COR 30 calendar days before the event.
9.12 - Voluntary Refund
(Rev. 11032; Issued: 09-30-21; Effective: 10-12-21; Implementation: 11-10-21)
If the MAC receives a voluntary refund from a provider on a claim in the RACDW, the
MAC shall process the refund as they do all other voluntary refunds (i.e., in accordance

with the Medicare Program Integrity Manual (MPIM), Publication 100-08, Chapter 4,
Section 4.2.2.8.1.3).
9.13 – Working with RAC Support Contractors
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The MAC shall work cooperatively with all RAC Support Contractors by providing all
requested data. This includes the Data Warehouse Contractor, the Validation Contractor,
and any other contractor supporting the RAC process.
9.14 - Receivables Initiated by the RAC as Independent Audit
Accessible Information
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
As stated in the MFMM, Chapter 7, Section 20.1, CMS requires its contractors to
perform risk assessments on an annual basis. If an independent auditor requests the MAC
to provide information on a RAC-initiated improper payment, the MAC shall request the
documentation from the RAC and submit it to the auditor as requested. This process shall
be documented in the JOAs. Situations where the RAC does not provide documentation
as requested should be sent to the CMS COR, as soon as possible.
9.15 – MAC Participation in the Review Approval Process
(Rev. 921, Issued: 11-06-19 Effective: 11-04- 19, Implementation: 11-04-19)
The RACs are expected to share CMS-approved new issue packages with their respective
MACs. However, MACs are no longer required to provide a validation report to CMS for
each new issue package. MACs shall participate in conference calls with CMS on ad hoc
basis when needed to discuss review topic questions if they arise during or after the
approval process.

Transmittals Issued for this Chapter
Rev # 	Issue Date 	Subject
Impl Date CR#
R12772PI 08/09/2024 	Updates of Chapter 1, Chapter 2, Chapter 3,
Chapter 4, and Chapter 9 in Publication
(Pub.) 100-08, Including Complaint Referral
Coordination Between Contractors
09/20/2024 13719
R11032PI 09/30/2021 	Updates to Chapters 1, 3, 4, 5, 8 and 9 of
Publication (Pub.) 100-08
11/10/2021 12375
R10984PI 09/09/2021 	Updates to Chapters 1, 3, 4, 5, 8 and 9 of
Publication (Pub.) 100-08 - Rescinded and
replaced by transmittal 11032
11/10/2021 12375
R921PI 	11/06/2019 	The Medicare Fee-for-Service Recovery Audit
Program
11/04/2019 11464
R908PI 	10/04/2019 	The Medicare Fee-for-Service Recovery Audit
Program- Rescinded and Replaced by
Transmittal 921
11/04/2019 11464
R71PI 	04/09/2004 	Rewrite of Program Integrity Manual (except
Chapter 10) to Apply to PSCs
05/10/2004 3030
R43PI 	06/20/2003 	Plan of Care Documentation 	07/01/2003 2727
R03PIM 	11/22/2000 	Complete Replacement of PIM Revision 1. 	NA 	1292
R01PIM 	06/2000 	Initial Release of Manual 	NA 	931
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