CMS Restarts Parts of the RAC Program

The Centers for Medicare and Medicaid Services is restarting the controversial Recovery Audit Contractor Program—in a limited fashion—in August.

CMS sent a communication on August 4 to congressional health staff members from Lauren Aronson, Director of the Office of Legislation at CMS, informing them of the decision.

“Today, the Centers for Medicare and Medicaid Services announced plans to modify contracts with current Recovery Auditors to allow for a limited number of Medicare fee-for-service claim reviews beginning in August 2014,” states the communication. “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. The Recovery Auditors will not conduct any inpatient hospital patient status reviews during this limited restart period.”

The Tax Relief and Health Care Act, enacted in December 2006, established a permanent Medicare RAC program. A new paragraph was added to section 1893 of the act, requiring the establishment of a national RAC program for Medicare Part A and Part B. And, Section 6411(b) of the Affordable Care Act amended section 1893(h)(1) of the act by requiring the establishment of RAC programs for Medicare Parts C and D as well.

“Section 1893(h) of the Act requires CMS to contract with entities to identify and correct improper payments for Medicare claims,” states Aronson. “This limited Recovery Audit Program restart may continue until the new Recovery Auditor contracts are awarded with sufficient time for an orderly transition. The restart will not include the Recovery Audit program improvements that are planned for the new contracts.”

The CMS website states that due to the “continued delay in awarding new Recovery Auditor contracts” it is initiating contract modifications to the current Recovery Auditor contracts to allow the Recovery Auditors to restart some reviews. In addition, CMS says that it “remains hopeful that the new round of Recovery Auditor contracts will be awarded this year.”

In February, 111 bipartisan members of Congress sent a letter to then-Health and Human Services Secretary Kathleen Sebelius arguing that aspects of the RAC program are unfair and violate the way that the Medicare program was intended to operate by raising out-of-pocket costs for beneficiaries.  

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