RAC auditors recovered more than $700 million in improper payments in the last reporting year. That money came from somewhere, and if your documentation practices are shaky, it may have come from practices like yours. Here's how to stay off the list and win the appeals you do face. The dollars add up quickly: even a modest error rate here means avoidable revenue loss every year.
If you're working through these issues, our compliance and auditing services can help you address them systematically.
Recovery Audit Contractors identify improper payments through automated and complex reviews. Automated reviews catch billing errors that don't require medical record review, wrong units, bundling violations, invalid code combinations. Complex reviews require human review of your records and are where real money gets recovered.
Current RAC focus areas in 2026 include:
RAC audits typically begin with an Additional Documentation Request (ADR). You have 45 days to respond with the requested records. Miss that window and the claim is automatically denied.
Assign someone in your organization as the RAC ADR coordinator. Every ADR needs to be logged, records need to be pulled and reviewed before submission, and the response needs to go out on time. A disorganized ADR response is almost as bad as no response.
If a RAC denies your claim, you have five levels of appeal:
The best RAC appeals include three things: a clear statement of the clinical facts, a connection between those facts and the applicable coverage policy, and supporting evidence from peer-reviewed literature when medical necessity is disputed.
If you're appealing an inpatient status denial, lead with the physician's clinical reasoning at admission, not just what happened during the stay. RACs are looking at the admission decision, and your appeal should directly address that decision point.
The best RAC strategy is to avoid the audit in the first place. That means:
RACs work on contingency: they keep a percentage of what they recover. They're incentivized to find overpayments. Make it hard for them to find anything.
The 45-day clock starts when the request is dated, not when the right person finds it. Route all audit letters to a single owner, log the date received, and calendar the response deadline with reminders at 30 and 40 days. That one habit prevents the most avoidable loss in the process, which is a claim denied automatically for a missed deadline.
In the first week, pull the medical record for each requested claim and read it as a reviewer would. Does it show why the service was needed, what was done, and who did it? Check signatures and dates. If something is missing, don't write it in after the fact. If an entry is legitimately late, label it as a late entry with the current date and the reason.
Send the reviewer exactly what they asked for, in the order they asked for it, with a cover sheet that lists what's included. Number the pages. Include the orders, the notes, the test results, and any signature attestations the record needs. Don't bury the key page in a stack of unrelated material, because a tired reviewer who can't find the support may deny the claim.
Keep a complete copy of everything you send, along with proof of the date and method of delivery. If the claim is denied, that copy is the starting point for the appeal, and it shows what the reviewer actually had in front of them.
When a RAC denies a claim, ask what went wrong and whether the same problem exists elsewhere. If it was a missing signature, check other providers' notes. If it was a unit error, look at every claim built the same way. The claim in front of you is one case. The pattern behind it is the real exposure. Contractors can look back three years, and on a practice with a recurring pattern here, that lookback can put a large recoupment at stake, before the cost of the appeal.
Track your audit results over time: which services were reviewed, how many were denied, and how many you won on appeal. After a year you'll see which areas draw attention and which fixes worked. Use that history to decide where to spend your internal audit time.
RACs can only audit topics that have been approved for review, and those topics are public. Read the current approved issues list once a quarter and compare it to what your practice bills. If a service you provide often is on the list, run a small internal review of it. If your documentation is solid, you've lost an afternoon. If it isn't, you've found a fix before a request arrives.
Keep a short file for each topic that matches your practice: the policy that governs it, the documentation that supports it, and the date you last reviewed a sample. When a records request arrives on that topic, you'll already know where the record is strong and where it's thin.
Finally, share the list with providers. When physicians know which services draw attention, they tend to document them more carefully without being asked.
45 days. The article says RAC audits typically begin with an Additional Documentation Request, and if you miss the window the claim is automatically denied, so assign one person to own the response.
Five, according to the article, starting with a redetermination by the Medicare Administrative Contractor, which must be filed within 120 days of the denial notice. Later levels go through independent reconsideration and beyond.
The article says a strong appeal states the clinical facts clearly, connects them to the applicable coverage policy, and adds supporting evidence, such as peer-reviewed literature, when medical necessity is the issue.
The billing gaps most practices don't catch until they show up as denials. Get the checklist: free, no spam.
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Revenue check: Run a quarterly sample of 20 to 30 claims in this category against the supporting documentation. It's a small time investment that reliably catches five-figure problems before a payer does.
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