CMS to put off new RAC contracts for another year

Those companies waiting to bid for a recovery audit contractor (RAC) pact from the Centers for Medicare & Medicaid Services (CMS) will have to wait.

A ruling by the U.S. Court of Federal Claims has likely pushed the bidding process back by as much as a year, RacMonitor reports.

The court granted a stay of new contracts in three RAC regions while litigation among the firm CGI Federal, CMS, and the U.S. Department of Health and Human Services (HHS) is pending, according to the article.

CGI Federal, the RAC for region B, sued CMS and the HHS, claiming that its plans to award new RAC contracts would be arbitrary and capricious. It also objected to the revised payment methodology for RAC collections. CMS wants to delay paying any disputed claims until they have reached the second level of appeals, a process that can take more than a year on average.

CMS and HHS made the changes under pressure from hospitals, which have long protested the current RAC system and lengthy amount of time required to settle an appeal of a rejected claim.

The Court of Federal Claims rejected CGI's argument, but agreed to stay the awarding of new contracts while the company appealed its ruling.

"The stay granted by the judge in this case until the appeals process has been exhausted effectively puts the subject matter of when the new RAC contracts will be awarded to rest for a year--at least in our opinion," wrote Emily Evans, a partner at Obsidian Research, according to RacMonitor. And while two regions where RACs operate were not a subject of CGI's litigation, Evans suggested that it was highly unlikely contracts would be awarded in those regions while the fate of the lawsuit remains up in the air.

As a result, new contracts likely won't be awarded until the end of 2015, and the current RAC contractors will likely continue limited audits until 2016, RacMonitor reported.

To learn more:
- read the RacMonitor article

Read more on