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CMS Restructures RAC Program

Beset by legal challenges and a burdensome backlog of pending appeals, the Centers for Medicare & Medicaid Services (CMS) is implementing sweeping changes to its Recovery Auditor (RAC) program, as evidenced by documents obtained by RACmonitor.

Among those documents is the request for proposal (RFP) issued by CMS for the re-procurement of recovery auditor contracts. As reported here recently, PRGX Global, formerly known as PRGX Global-Schultz and currently a subcontractor to three RACs, is among those known to have submitted an RFP in hopes of becoming a prime RAC contractor.

Current RAC contracts are expected to expire in February 2014. The deadline for RFP submittal was April 4, 2013. The new RAC contract period is to extend from 2014 to 2018.

The most sweeping of all anticipated changes is that CMS will have recovery auditors in all four geographical RAC regions, as currently configured, with a fifth “nationwide” RAC responsible for identifying overpayments among home health hospice facilities and durable medical equipment (DME).

Under the plan, the four regional RACs no longer will handle improper payments for home health, hospice or DME.

Still another change to the RAC program is that CMS is requiring recovery auditors to support the agency throughout the entire appeals process, including at the administrative law judge (ALJ) level. According to its 2013 Statement of Work (SOW), CMS writes:

“For any Recovery Auditor-identified improper payment that is appealed by the provider, the Recovery Auditor shall provide support to CMS throughout the administrative appeals process and, where applicable, (during) a subsequent appeal to the appropriate federal court. This includes participating or taking party status at the administrative law judge (ALJ) level of appeal in a minimum of 25 percent of the cases that reach this level.”

“The RACs will also now be required to participate and support CMS to defend against provider appeals,” Emily Evans of the Nashville, Tenn.-based Obsidian Research Group (ORG) wrote in a memo to investors. “The time frame for completing claims reviews is cut in half, from 60 to 30 days, and the new program will give CMS more teeth to stop work with a contractor that does not follow guidelines.”

CMS has been under siege on two fronts recently: first via the lawsuit filed in federal court on Nov. 1, 2012 by the American Hospital Association against the U.S. Department of Health and Human Services, and second, the recently proposed legislation by U.S. Rep. Sam Graves (R-Mo.) and Rep. Adam Schiff (D-Calif.), who introduced the Medicare Audit Improvement Act of 2013 (HR 1250) on March 19, 2013.

Evans writes that while ORG believes the changes to the RAC program are “not favourable in the short run,” the company believes that long-term opportunities remain “robust.”

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