CMS Announces Update on Recovery Audit Contractors (RACs)

In October 2008, CMS announced the award of contracts to four national recovery audit contractors, or RACs. Those contract awards were protested and a stop work order was put in place. Consequently, the implementation of the national RAC program was put on hold until the protests could be resolved. The protests were resolved on February 6, 2009. The settlement of the protests means that CMS will now continue with the implementation of the national RAC program.

As mandated by section 302 of the Tax Relief and Health Care Act of 2006, CMS will implement a permanent and national RAC program by January 1, 2010. The national RAC program is the outgrowth of a successful demonstration program that used RACs to identify Medicare overpayments and underpayments to health care providers and suppliers in California, Florida, New York, Massachusetts, South Carolina, and Arizona.

The national RACs were selected under a full and open competition process. As announced in October, the new RACs are:

• Diversified Collection Services, Inc. (DCS) of Livermore, California, in Region A, initially working in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and New York.
• CGI Technologies and Solutions, Inc. of Fairfax, Virginia, in Region B, initially working in Michigan, Indiana and Minnesota.
• Connolly Consulting Associates, Inc. of Wilton, Connecticut, in Region C, initially working in South Carolina, Florida, Colorado and New Mexico.
• HealthDataInsights, Inc. (HDI) of Las Vegas, Nevada, in Region D, initially working in Montana, Wyoming, North Dakota, South Dakota, Utah and Arizona.

As part of the settlement of the protests, the four RACs listed above will contract with subcontractors to supplement their efforts. PRG-Schultz, Inc. will serve as a subcontractor to HDI, DCS and CGI in Regions A, B and D. Viant Payment Systems, Inc. will serve as a subcontractor to Connolly Consulting in Region C. Each subcontractor has negotiated different responsibilities in each region, including some claims review.

With regard to next steps, over the next several months, CMS will begin contacting associations and providers to discuss provider outreach sessions involving the RACs. Providers will not begin receiving correspondence from a RAC until the RAC and CMS have completed the provider outreach.

For additional information on the RAC program, please see the CMS website.