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Update on Medicare Recovery Audit Contractor (RAC)

by Donna D. Wilson, RHIA, CCS

By now we have all heard about and/or experienced the CMS Recovery Audit Contractor (RAC) initiative established to identify improper payments (overpayments and underpayments) to the Medicare system. Being from the state of South Carolina, we were one of the five states selected for the RAC demonstration project. During this demonstration period, CMS listened to the concerns of these states and outlined some lessons learned.

As outlined in a recent CMS Town Hall meeting on September 22, Connie Leonard, director, division of recovery audit operations and Melanie Combs-Dyer, CMS RAC senior technical advisor, listed several lessons learned. Below are changes that will become effective under the permanent RAC initiative:

  1. Concern: RACs had a significant financial impact on some providers
    • Change: 
      • Limit the number of medical record requests 
      • Limit the RAC “look back period” claims paid from 10/1/08 forward
  2. Concern: RACS were not required to hire physicians and certified coders
    • Change:
      • CMS has required each RAC to hire a physician medical director.
      • CMS has required each RAC to hire certified coders and credentials will be available upon request

Anxiously, we all await the permanent RAC implementations within our states. For South Carolina, it will be sooner rather than later. On October 6, CMS announced the names of the new national RACs. These are:

  • Diversified Collection Services, Inc. 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. of Las Vegas, Nevada, in Region D, initially working in Montana, Wyoming, North Dakota, South Dakota, Utah, and Arizona.

Additional states will be added to each RAC region in 2009. Statewide training will occur prior to rollout.  The RAC will work in conjunction with your state hospital association to outline timelines and procedures.  Connie Leonard stated at the Town Hall meeting that we should receive record requests beginning in December or January for the state of South Carolina. 

Find out when your state is slated to move into the permanent RAC initiative. Stay tuned for any hospital association meetings pertaining to the RAC initiative and become RAC ready when the first record request hits your door!

For more information on the permanent RAC visit www.cms.hhs.gov/RAC

For more information on the RAC appeal process visit www.cms.hhs.gov/manuals

Email any questions to RAC@cms.hhs.gov

About the Author:

Donna Wilson is a senior director at Compliance Concepts, Inc.

For more information, contact:
Donna Wilson



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