On January 16, 2014, the U.S. Senate passed an omnibus spending bill for FY 2014 that includes several important healthcare provisions, and President Obama signed the legislation the following day on January 17, 2014.  Importantly, the package includes directions to CMS to conduct better oversight of the Recovery Audit Contractor (RAC) program. 

The package appropriates more than $3.5 billion for CMS program management activities.  In a Joint Explanatory Statement that describes some of the program objectives for this funding, Congress directs CMS to develop a “plan with a time line, goals, and measureable objectives to improve the RAC process.”  Congress notes that roughly half of the 43,000 provider appeals of RAC determinations were overturned at the Office of Medicare Hearings and Appeals (OMHA), prompting Congress to express “concern that the CMS RAC program has created incentives for RACs to take overly aggressive actions” that result in RACs “chasing dollars after the fact.”  Congress further directed CMS to “establish a systematic feedback process with the OMHA, CMS programs and the RACs to prevent the appearance that RACs are selecting determinations to increase their fees.”  Indeed, the explosion in appeals of RAC determinations and other provider/supplier claims has led to a significant backlog at OMHA, described in further detail in a King & Spalding client alert available here.

Also of note, Congress instructed CMS to provide additional details within 90 days of enactment regarding the agency’s plans to further package drugs and biologics into Part B outpatient payment rates.  Congress expressed concern that CMS may be expanding its packaging policies without sufficient criteria to justify a single payment amount.

The bill is H.R. 3547, and the Joint Explanatory Statement is available by clicking here.

Reporter, Christopher Kenny, Washington, D.C., + 1 202 626 9253, ckenny@kslaw.com