RAC Stop Work Order Lifted: RAC Moving Forward

Last year, a Medicare Recovery Audit Contractor (RAC) contract award dispute necessitated an automatic halt to the implementation of the permanent RAC Program roll out. That dispute has now been settled, and has resulted in some of the RAC responsibilities being subcontracted to the challengers. As a result, Centers for Medicare and Medicaid Services (CMS) announced on Feb. 6, 2009, that the stop work order has been lifted, and it will now implement the permanent RAC Program, which authorizes RACs to conduct postpayment reviews of claims and to search for improper payments, both overpayments and underpayments.

The final RACs and their jurisdictions are as follows:

• Diversified Collection Services, Inc. of Livermore, Calif. – Region A (encompassing Rhode Island, New Hampshire, Vermont, Massachusetts, Delaware, Connecticut, New York, Pennsylvania, New Jersey and Maine)
  
  
• CGI Technologies and Solutions, Inc. of Fairfax, Va. – Region B (encompassing Minnesota, Michigan, Wisconsin, Indiana, Illinois, Kentucky and Ohio)
  
  
• Connolly Consulting Associates, Inc. of Wilton, Conn. – Region C (encompassing South Carolina, North Carolina, Florida, Colorado, New Mexico, Texas, Oklahoma, Alabama, Tennessee, Georgia, Mississippi, West Virginia, Virginia, Louisiana and Arkansas)
  
  
• HealthDataInsights, Inc. of Las Vegas, Nev. – Region D (encompassing Montana, Wyoming, North Dakota, South Dakota, Utah, Arizona, Washington, California, Oregon, Idaho, Nevada, Nebraska, Kansas, Iowa, Missouri, Hawaii and Alaska)

Certain responsibilities in Regions A, B and D will be subcontracted to PRG-Shultz, Inc. (the Demonstration RAC for California and other Western states) and to Viant Payment Systems, Inc. in
Region C.

The CMS Feb. 6 Notice did not identify timelines for when the RACs might begin their reviews. However, prior to imposition of the stop order, CMS had promised to hold educational meetings, including town hall meetings, to introduce each RAC to providers in its region and to clarify the process. We expect that CMS will update the schedule of the rollout in the near future.

Now that the permanent RAC Program is finally ready to rollout nationwide by Jan. 1, 2010, all manner of health care providers may be audited. Preparation for the RAC Program therefore is appearing as a key concern for every provider's 2009 internal agenda. Preparation efforts include assessing the completeness of medical records, reviewing and assessing familiarity and compliance with coverage and coding requirements, and learning RAC procedures and appeal deadlines. Taking such steps can be expected to help the provider:

• Respond faster and with less expense to RAC requests
  
  
• Reduce the number of RAC denials
  
  
• Avoid missed appeal deadlines
  
  
• Make appropriate corrections to operations

We recommend that all providers pay close attention to the strict timelines associated with RAC record requests and appeals of RAC denials. Failure to respond timely to a RAC record request will result in an automatic denial. Failure to submit requests for appeals of the RAC denials, or to the provider supporting documentation early in the administrative appeal process, may deprive the provider of its opportunity to challenge the RAC denial, absent good cause for late filing or late submission.

In light of many legal and factual concerns that surfaced in the RAC Demonstration Project, and despite CMS efforts to redesign the RAC Program to incorporate “lessons learned,” close monitoring of the rollout of the permanent RAC Program and careful consideration of preserving appeal rights is recommended should systemic problems surface. As a result, you may wish to consult with legal counsel at an early stage of any RAC denial or appeal.