How do you prepare a medical practice for a Medicare RAC audit?

RACs review paid Medicare fee-for-service claims for overpayments and underpayments, focused on issues CMS has approved on its RAC issue list. Common targets in outpatient practice are evaluation and management (E/M) level upcoding, modifier 25 usage, medical necessity for high-cost procedures and imaging, duplicate billing, and incorrect place-of-service coding. Preparation has four layers. Layer one is documentation hygiene. CMS requires providers to retain medical records sufficient to support each claim for the period defined by federal regulation (commonly cited as 5 to 10 years depending on the issue and state law, with longer periods for false claims exposure). Templates that auto-populate documentation without provider review are a common audit failure point. Each note must independently support medical necessity, the level of service billed, and any modifiers applied. Layer two is internal coding audit. Run a quarterly internal audit on a sample of high-risk codes for your specialty: 99214/99215 mix, modifier 25 claims, imaging studies, infusions, procedures with shared E/M services. Have a certified coder (CPC or specialty equivalent) review documentation against the billed code and flag any that would not survive external review. Track the error rate and remediate. Layer three is response workflow. Designate a RAC point person, usually your billing manager or compliance officer. When a record request arrives, log it, calendar the 45-day response window, pull the requested records, and have the supporting provider sign off on the response. Send by tracked, traceable method and retain the audit trail. Late responses are an automatic loss. Layer four is appeal readiness. RAC findings can be appealed through five levels: redetermination, reconsideration, ALJ hearing, Medicare Appeals Council, and federal court. The first two levels are fast and inexpensive; ALJ hearings historically had multi-year backlogs. Practices that win on appeal typically do so because their documentation, not their argument, was strong. If you discover systemic upcoding or miscoding during prep, talk to a healthcare attorney about a voluntary self-disclosure to OIG; that is a separate decision with significant legal implications and should not be made unilaterally.