CMS RAC Reality: the Now versus the Future

The Centers for Medicare and Medicaid Services (CMS) announced the award of the first of the five new Recovery Audit Contracts (RAC) on December 30, 2014. CMS also announced the extension of the existing RAC contracts on December 24, 2014.

CMS awarded the Region 5 RAC contract to Connolly, LLC, a subsidiary of Connolly iHealth Technologies, to identify and correct improper payments for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), and home health/hospice (HH/H) claims.  As the first of the new RAC contracts, this marks the beginning of implementation for many improvements promised by CMS, and listed at Recovery Audit Program Improvements. To date, there are no documents publicly available that define or explain these changes, beyond what can be found in the document posted there, as of December 30, 2014.

None of the other regional contracts have been awarded as yet, as a result of objections filed by CGI Federal, the current RAC for Region B, who sued CMS and its parent, the Department of Health and Human Services (HHS), objecting to a revised payment methodology for RAC collections. CMS intends to delay paying RACs their fees for any disputed claims until they have reached (and survived) the second level of appeals, a process that can often take more than a year. The Court of Federal Claims rejected CGI’s complaint, but agreed to stay the awarding of new contracts while the company appealed the court’s ruling.

While the improvements that CMS is offering to the program may offer some benefits to providers, it will nevertheless be some time before they take and/or have any effect on providers’ experience. The important thing to remember is that these improvements only apply to the new contracts, and have never been applied to existing RAC operations, even during the extensions that have already been used to continue RAC audits while CGI Federal’s complaints are resolved in the courts.

Improvements: For Now, Only for the New DME/HHH Contract

Since the changes being offered only apply to the newest contracts, and none of the others have been awarded, the changes only affect the work being started by Connolly for DMEPOS and HH/H claims. While some of the changes may indeed offer some relief to hospitals, it remains to be seen how much they will indeed limit unbridled, uncontrolled pursuit of contingency fees by the RACs.

Our own analysis of some of the suggested improvements leaves questions on several levels. Also, the changes were not made as a result of provider concerns about DMEPOS and HH/H denials, but rather due to concerns about the denials with the largest dollar impact on providers, namely medical necessity denials of inpatient claims by acute care facilities.

Extensions: Will Audits Be Limited or Wide Open?

The question arises, will this latest extension permit RACs to audit all their existing issues or only a limited set of issues? Previous extensions by CMS included some limitations, without explaining the logic of the limitations. For those previous extensions, as reported by Modern Healthcare, the Director of CMS’ Office of Legislation wrote to congressional staffers to explain that “current recovery auditors will conduct a limited number of automated reviews and a small number of complex reviews on certain claims including, but not limited to: spinal fusions, outpatient therapy services, durable medical equipment, prosthetics, orthotics and supplies, and cosmetic procedures,” and that they would “not conduct any inpatient hospital patient status reviews during this limited restart period.

It is important to note that no such language appears in the recent extension announcement, and there are no reports of any memos sent by CMS to Congress or staffers, similar to the memo mentioned above. The lack of the word “limited” in this announcement may be indicative of the agency’s intent, or rather the lack of intent to create any limits.

Also, one should note that the RAC moratorium on patient status reviews is about to end, as of March 31, 2015. While RACs won’t be able to ever review claims filed during the moratorium period, they can still review claims for other reasons besides patient status, plus all claims filed before that period, under the old rules.

Conclusion: (Reality, As We Know It Today)

For now, there is one big certainty and one big uncertainty. For the certainly, we can make statements of fact. For the uncertainly, we cannot state facts, only questions and opinions.

The big certainty is that one new contract has been awarded to Connolly, LLC, and new audits are forthcoming, nationwide, for DMEPOS, home health and hospice claims.

The big uncertainty is that while the existing Part A and Part B RACs have had their expired contracts reinstated and extended through calendar 2015, no one can say with certainly exactly what they will be auditing, nor can anyone say with certainly if their activities will be limited, as they were under previous extensions.

Of course, one should keep in mind that we still live under the dome of promulgated rules, and therefore those rules can change at any time, perhaps even faster than the U.S. Congress can conduct a voice vote.

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One Response to CMS RAC Reality: the Now versus the Future

  1. Pingback: CMS Spokesman Declares Patient Status Reviews Are Still Off Limits for RACs | Appeal Academy

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