Recovery Audit Contractors (RACs)
On November 3, 2008, CMS announced a delay in the Recovery Audit Contractors (RAC) program because of protests filed by two unsuccessful bidders with the Government Accountability Office (GAO). That resulted in CMS halting the contract work of four RACs that the agency named on October 6, 2008, pending a decision by the GAO. A decision is expected by early February 2009.
The RACs will be responsible for identifying Medicare payment errors in each of four regional jurisdictions. The RACs will be paid a contingency fee, based on the amount of improper payments that they are able to correct.1 The RAC contractors named by CMS last fall include the following:
- Diversified Collection Services, Inc.: Region A - Northeast
- CGI Technologies and Solutions, Inc.: Region B - Midwest
- Connolly Consulting Associates, Inc.: Region C - South Central and Southeast
- HealthDataInsights: Region D - West and Northwest
The Tax Relief and Health Care Act (TRHCA) of 2006, Section 302 directed the Department of Health and Human Services (HHS) to create a permanent RAC program and expand it to all 50 states by 2010.1
Key goals of the RAC program are to detect and correct past improper payments and to implement changes to prevent future payment mistakes. Each RAC will have a Medical Director. Also, RACs will need to return their contingency fee if a case is later overturned.1 A three-year CMS RAC demonstration project that ended in 2008 showed that the vast majority (85%) of payment mistakes involved overpayments to inpatient hospitals.2
1 CMS. Available at: www.cms.hhs.gov/rac/ and www.cms.hhs.gov/RAC/03_RecentUpdates.asp. Accessed December 3, 2008.
2 CMS. Medicare Recovery Contractors, (RACs). Medicare Provider Feedback Group town hall meeting. PowerPoint Presentation. September 22, 2008.
Coverage policies may vary by insurer or even between plans offered by the same insurer. This information is presented for informational purposes only and is not intended to provide reimbursement or legal advice. Laws, regulations, and policies concerning reimbursement are complex and are updated frequently. While we have made an effort to be current, the information may not be as current or comprehensive when you view it. Please consult with your counsel or reimbursement specialist for any reimbursement or billing questions.