Limited Restart of RAC Program

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On August 4, 2014, CMS announced that, due to the continued delay in awarding new Recovery Audit Contractor (RAC) contracts, CMS will modify its current RAC contracts to allow for a limited number of reviews of Medicare fee-for-service claims. According to the CMS announcement, RAC reviews will restart this month with the current RACs conducting a “limited number” of automated reviews as well as a small number of complex reviews of certain types of claims, such as spinal fusions, outpatient therapy services, durable medical equipment, prosthetics, orthotics and supplies, and cosmetic procedures. However, in accordance with the Probe & Educate period, CMS confirmed that the RACs will not conduct any inpatient hospital patient status reviews during the limited restart period.

The current RAC contracts lapsed in June 2014. During the rebidding process, CMS encountered delays as a result of several contests filed by entities seeking contract awards, including a lawsuit filed by one of the incumbents, CGI Federal, Inc., challenging a provision that would delay the time at which the RAC would receive contingency payments on a claim until after the claim is upheld on the second level of review. Despite these delays, in its August 4 announcement, CMS stated that it remains hopeful that the new round of RAC contracts will be awarded this year.

To view CMS’s announcement, click here. To view the CGI Federal complaint, click here.

Reporter(s), Isabella Edmundson, Atlanta, +1 404 572 3527, iedmundson@kslaw.com.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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