Recovery Audit Contractor (RAC) Program

What is the RAC program?

Under Section 6411(a) of the Affordable Care Act, each state must contract with a contingency-fee-based vendor to review provider claims.  The purpose of the review is to reduce improper Health First Colorado (Colorado's Medicaid Program) payments through the efficient detection and collection of overpayments, the identification of underpayments and the implementation of actions that will prevent future improper payments.  See also CRS Section 25.5-4-301 and 10 CCR 2505-10, Sections 8.050 and 8.076.

In November 2009, President Barack Obama signed Executive Order 13520 that aimed at reducing improper payments by increasing transparency in government and holding agencies accountable for reducing improper payments. A year later, Section 6411 of the Affordable Care Act was enacted, directing each state Medicaid program to establish a program in which it contracts “with 1 or more recovery audit contractors for the purpose of identifying underpayments and overpayments and recouping overpayments.” Learn more about the final rules established for the RAC program.

Who is the Department's RAC Contractor?

As of June 2016, the Department has awarded Health Management Systems, Inc., (HMS) a contract to act as its Recovery Audit Contractor (RAC). 

HMS serves as a RAC vendor in several other states around the nation. In addition, the Department is currently contracted with HMS to conduct third-party liability reviews to determine if another party is legally responsible for claims payment. The Department and HMS are now working to create a provider outreach plan on the RAC and what providers can expect. 

RAC Audit Scope

The purpose of the RAC is to reduce improper payments while also presenting billing education opportunities to providers to improve the accuracy of claims submitted to the Department for reimbursement. Under the RAC, all provider types will be audited. The RAC vendor will audit the following types of claims: Health First Colorado fee-for-service, waiver services, and managed care, and Child Health Plan Plus (CHP+) claims.  

HMS will conduct post-payment claims reviews, which evaluate provider submitted claims to determine whether services were actually provided, medically necessary, coded correctly, and properly paid or denied.  The RAC will identify both overpayments and underpayments in its audits.  Post-payment claims reviews may include review of medical records or a review of claims data only.

Are providers required to cooperate with the RAC?

Providers are required by Section 1902(a)(27) of the Social Security Act and 10 CCR 2505-10, Section 8.130  to:

  • Retain records necessary to disclose the nature and extent of services provided to recipients.
  • Maintain records which fully substantiate or verify claims submitted for payment.
  • Submit records to federal and state government upon request.

What happens if the provider does not cooperate?

Any claims for which documentation is not received upon request shall be deemed to be overpayments subject to recovery regardless of whether or not services were provided. The Department will recover the overpayments.

Where can I find out more information and who do I contact with RAC questions?

Contact Kim Nguyen, Contingency Based & Recovery Audit Contract Manager, with any questions at or 303-866-6575.