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 The issuance of the new Recovery Auditor Contractor (RAC) contracts has been in bureaucratic limbo since 2014, when CGI Federal (GIB) challenged the Centers for Medicare & Medicaid Services’ (CMS’s) use of a streamlined procurement process at the General Services Administration (GSA).

On Monday, CMS announced new contract awards as follows:

  • Region 1   Performant Recovery Services
  • Region 2   Cotiviti LLC (formerly known as Connolly Consulting)
  • Region 3   Cotiviti LLC (formerly known as Connolly Consulting)
  • Region 4   HMS Federal Solutions
  • Region 5   Performant Recovery Services 

Missing from the lineup is CGI Federal, which is famous – or rather infamous – for its handling of the Healthcare.gov rollout in 2014, and for the aforementioned challenge to procurement. According to press reports, CGI declined to submit a proposal. 

Also of interest is the CMS decision to award two regions to Cotiviti LLC. Cotiviti was known as Connolly Consulting under the old RAC contracts and was one of the better-performing contractors in terms of accuracy. However, HMS Federal Solutions had indicated to shareholders in the past that it would also be interested in serving two Part A/B regions. So, either HMS Federal Solutions changed its mind or CMS felt Cotiviti was more deserving of an award of two regions. In that latter case, we would expect a post-award protest to the Government Accountability Office.

If a protest is lodged, RAC activity will be delayed for two to three months, but should begin sometime in the middle of the first quarter of 2017. For inpatient acute-care hospitals, the new RAC program is not likely to run as wide-open as it did 2010-2014. CMS is limiting the lookback period for the highly lucrative (from the RACs’ perspective) short-stay inpatient claims. CMS is also limiting additional documentation requests (ADRs) across facilities and claim types so that one area of a large health system is not unduly burdened.

For other providers, we expect the story to be much different. Inpatient hospitals got most of the attention between 2010 and 2014 while other areas of the Medicare payment system were ignored. 

Hospice, for example, was virtually unaudited by RACs despite being an area identified by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) and press reports as prone to abuse and possible fraud. Home health agencies have also experienced less auditing relative to inpatient hospitals and will likely be an area of focus under the new RAC contracts.

The impact RACs will have on less concentrated areas of Medicare such as hospice and home health will likely be magnified by the absence of an infrastructure to handle claims reviews. Most inpatient hospitals have compliance specialists able to manage the RAC reviews, while home health and hospice providers may not. 

In any event, it is time for providers to get ready, as it is unlikely the RAC program is going away anytime soon. 

About the Author

Emily Evans is the managing director of health care policy at Hedgeye in Washington, D.C.

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