Name Process Penalties Appeals process
Medicare RACs use proprietary software programs
to conduct two types of audits: Automated audits
can lead to a decision without requesting a medical
record; and complex audits allow a Medicare RAC
to contact providers to request medical records to
make a payment decision. RACs are limited to 10
medical records per single practitioner within a
No penalty if the provider
agrees with the Medicare RACs’
and repays CMS. If a provider
misses a deadline in the
appeals process, CMS is
permitted to automatically
recoup alleged overpayment plus
interest. RACs must wait until the
second level of appeal before
collecting a contingency fee.
The Medicare RAC appeals
process mirrors the five-level
Medicare claims appeals
process. The first level of
appeal must be filed by the
120th day after receiving the
letter of demand.
States have discretion in how to coordinate and
conduct audits and recoup overpayments. States are
required to set limits on the number and frequency of
medical records to be reviewed by the Medicaid RAC.
No penalty if the provider
agrees with determination of an
overpayment and repays CMS.
If a Medicaid RAC identifies
potential fraud, the case could
be referred to the state MFCU.
RACs only collect fees on
recovered overpayments and
corrected underpayments, and
RAC contractors must return
any recoveries after a successful
States have flexibility to decide
the structure of the appeals
process for providers to appeal
any adverse determination
made by the Medicaid RAC.
MICs use a data-driven approach to focus on
aberrant billing practices, analyze Medicaid claims,
and audit providers.
Identified overpayments are referred to states for
collection; there is no limit to the number of claims
records that MICs can request.
Penalties, if any, are
determined by each state.
Each state individually
adjudicates provider appeals.
TABLE 2. PROCESS, PENALTIES, AND APPEALS PROCESS
Name Scope Auditor Look-back period
The PERM program identifies and estimates the
rate of improper payments in Medicaid and the
Children’s Health Insurance Program. Individual
state error rates are measured and then
combined to extrapolate a national error rate.
PERM program findings are not considered a
measure of fraud, as findings are based on a
random sample of Medicaid claims and not an
examination of billing patterns.
The PERM program is operated by
two private CMS contractors.
The PERM program reviews
Medicaid claims on a
post-payment basis. The
reviewed claims are limited
to the current federal
fiscal year (the complete
measurement cycle is 22 to
TABLE 1. SCOPE, AUDITOR, AND LOOK-BACK PERIOD (CONTINUED)
NOV 2015 BULLETIN American College of Surgeons
WHAT SURGEONS SHOULD KNOW ABOUT...
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