How are RACs paid?
Recovery audit contractors (RACs) are paid on a contingency fee basis. The amount of the contingency fee is a percentage of the improper payment recovered from, or reimbursed to, providers. The RACs negotiate their contingency fees at the time of the contract award. The base contingency fees range from 9 to 12.5 percent for all claim types, except durable medical equipment (DME). The contingency fees for DME claims range from 14 to 17.5 percent. The RAC must return the contingency fee if an improper payment determination is overturned at any level of appeal.