What do RACs do?

• A. They identify improper payments and recoup overpayments
• B. They set Medicare payment rates
• C. They certify physicians
• D. They approve drug formulary changes

Answer: (A)

RACs, or Recovery Audit Contractors, are responsible for examining Medicare claims after they’ve been paid to find improper payments and recover overpayments. They analyze claim data, look for billing errors such as upcoding, unbundling, or services not actually provided, and then issue requests for repayment or recoup the funds with any required interest. This focus on detecting overpayments and recovering funds is exactly what the choice describes.

They don’t set Medicare payment rates—that’s handled by CMS policy and payment rules. They don’t certify physicians, which is a licensing/credentialing function, and they don’t approve drug formulary changes, which are managed through CMS formularies and related processes.