A Recovery Audit Contractor is best described as which of the following?

• A. Managed care organization that approves payments
• B. A hospital credentialing service
• C. A private auditing firm for patient records
• D. Recovery Audit Contractor

Answer: (D)

The idea being tested is the role of Recovery Audit Contractors in the Medicare program. CMS hires private firms to act as Recovery Audit Contractors to review paid claims and recover overpayments. They perform post-payment audits to identify improper payments—such as coding errors, upcoding, duplicate billing, or missing documentation—and then pursue repayment or adjustments in future payments. That direct focus on identifying and recovering overpayments makes the term itself the best description of the entity. The other options describe different functions (a payer that approves payments, a credentialing service, or a generic private auditor) that don’t capture the specific recovery mission of a RAC.