Audit and Compliance



Oct. 31 marked a big day for the Medicare Fee-For-Service Recovery Audit Contractor (RAC) program. That's when the Centers for Medicare and Medicaid (CMS) announced the news we've all been waiting for-the five new contracts for the RAC program. Contracts were awarded to the following vendors:

  • Region 1 - Performant Recovery, Inc.
  • Region 2 - Cotiviti, LLC (formerly Connolly)
  • Region 3 - Cotiviti, LLC (formerly Connolly)
  • Region 4 - HMS Federal Solutions
  • Region 5 - Performant Recovery, Inc.

About the Regions

While it may appear a new vendor is assigned to Regions 2 and 3, the same vendor is actually maintaining responsibility for these areas. The company formerly known as Connolly recently merged with iHealth Technologies to become Cotiviti Healthcare. Also of note, CGI Group will not return as a RAC contractor.

Region 5 will be the only region focused on the post-payment review of DMEPOS (Durable Medical Equipment, Prosthetics, Orthotics, and Supplies), and Home Health/Hospice claims. The Region 5 vendor, Performant Recovery, Inc., will handle these claims on a national basis. Additional details regarding each region are available on the CMS website.

Other Changes to the RAC Program

In addition to the new contracts that have been awarded, other changes have been made to the RAC program. Some have been in the making for more than a year, others were announced more recently. All will impact the next phase of audits and lead to process changes for RAC contractors with the ultimate goal, according to the CMS, of reducing the burden on provider teams managing the audits.

  • RAC Payment Timeline. The payment timeline has been updated to award RAC contractor payment only after a provider's challenge has passed the second level of the appeal process. This process can take up to a year or more-a far cry from the previous timeline which could pay RACs within 45 days.
  • Shorter Audit Timelines. New audit timelines proposed by the CMS in 2015 are being upheld under these new contracts. RACs are now permitted to review only claims up to six months old-as opposed to the previous threshold that allowed for claims up to three years old to be reviewed. It is our understanding that the six month window only pertains to medical necessity reviews, not other types such as DRG changes or outpatient claims. The six month window was established to give hospitals the opportunity to rebill the case under Part B within the one year timely filing rule.
  • Proposal Contingency Rates. As reported by Modern Healthcare, as a result of the changes to the RAC payment timeline, "potential RACs will likely submit proposals with contingency rates as high as 20% compared to the current rates of between 9.5% and 12%."

Additionally, it's been reported that RACs will be instructed to focus on hospitals with unusually high rates of denied claims.

Preparing for RAC Audits

While it's still not clear when the next phase of RAC audits will begin, it's highly anticipated it won't take long to launch. This is especially likely given that most of the vendors are returning to the program.

The audit process can be complex, cumbersome and time consuming. With these recent changes, there's no better time than now to evaluate your RAC audit solution to ensure you are poised to efficiently and effectively navigate the next phase of audits and protect your Medicare reimbursement dollars.