RAC Audit Appeals: What Physicians Need to Know

  • Physicians who do not agree with the Recovery Audit Contractors (“RAC”) auditors’ findings should seriously consider filing an appeal. RAC audit findings are often erroneous and are overturned approximately half of the time when reviewed by Administrative Law Judges (“ALJ”). The decision to appeal depends on the particular facts of your audit, and will ultimately depend on the strength of your case that the auditors’ conclusions were erroneous and on the amount of money at stake.
  • Your first step when faced with an adverse audit determination should generally be to request the opportunity to discuss the audit findings. The request for a discussion should be filed within 15 days of receiving an overpayment request letter. You should be aware, however, that a request for a discussion does NOT begin an appeal and does NOT change any of the appellate deadlines.
  • There are five levels of appeals from adverse RAC audit determinations. The first level of appeal is referred to as a “redetermination” and must be filed within 120 days of the overpayment request letter.
  • The decision as to when to file the redetermination appeal is a very important one, which should be made in consultation with your legal and financial advisors. To avoid automatic recoupment of the alleged overpayment amount, you must file your redetermination appeal within 30 days of the overpayment demand letter. The benefit of filing the appeal within the first 30 days is that you avoid the requirement to immediately repay the amount demanded. However, if you lose your appeal at the ALJ level (the third level of appeal), you will be required to repay the amount owed with interest compounded every 30 days. The current interest rate is 10.50%. (Conversely, if you repay the amount demanded and you ultimately win your appeal, CMS is required to pay you interest at the same 10.50% rate compounded every 30 days.)
  • If you lose at the redetermination level, you may file a second level appeal, which is referred to as the “reconsideration.” The reconsideration is filed with a Qualified Independent Contractor (“QIC”), who has 60 days to conduct the review.
  • If you lose at the reconsideration level, you have 60 days to file an appeal with an ALJ. ALJ’s overturn the RAC auditors’ findings approximately 50% of the time and many physicians believe that review by an ALJ provides the first opportunity for the RAC auditors’ findings to be seriously scrutinized. If you lose at the ALJ level and had filed your first level appeal within 30 days, you will at this point be required to pay CMS with interest.
  • If the ALJ upholds a RAC auditor’s overpayment finding, you have 60 days to file a fourth level appeal with the Health and Human Services Appeal Board. If you again lose at this level, you have 60 days to file a fifth level appeal to a federal district court.

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