Final answer:
RACs identify improper payments; the correct action for claims processing contractors is to correct the payment, not engage in legal actions, blanket claim denials, or IRS reports unless warranted by fraud.
Step-by-step explanation:
When Recovery Audit Contractors (RAC) identify improper payments as overpayments, the claims processing contractor must correct the payment. This includes recouping any overpaid amounts from providers. The process does not typically involve initiating legal proceedings, denying all future claims, or reporting the provider to the IRS unless there is evidence of fraud or other criminal activity. The main goal of the RAC program is to correct overpayments and underpayments to ensure appropriate expenditures in the Medicare program.