CMS delays new RAC contracts

A legal entanglement involving the Centers for Medicare & Medicaid Services (CMS) and one of its recovery audit contractors (RACs) has delayed the awarding of new RAC contracts, AHA News Now reported.

The litigation was brought in the U.S. Court for Federal Claims earlier this year by CGI Federal,  the RAC for CMS' region B, which includes Indiana, Michigan, Minnesota, Illinois, Kentucky, Ohio and Wisconsin. CGI Federal objects to the new payment methodology for the RACs.

Under the current contracts, RACs receive payment for every disputed claim after it has reached the first level of claims determination, part of a five-step process that can often take years. However, in most instances, level one, which is the equivalent of an internal review, takes about 120 days. CMS now wants to withhold payments until claims have reached level two, which can take up to 400 days, according to the Wachler & Associates blog.

CMS introduced the RAC program in 2009 after a successful pilot project. The intent of RACs is to find improperly billed or inflated claims. The use of RACs has come under relentless criticism from hospitals and other providers, who claim that the auditing process is both intrusive and expensive. As a result, CMS made changes to the way that RACs review claims and how they are paid.

CMS planned to award the first round of new RAC contracts sometime in early June, according to Wachler. However, AHA News Now reported that CMS pushed that date back to mid-August.

CGI Federal, the U.S. arm of the Canadian firm CGI Group, is best known for being one of the dismissed contractors associated with the botched introduction of the federal health exchange website last year. It has several other support contracts with CMS, the Daily Caller reported.

To learn more:
- read the AHA News Now article
- check out the Daily Caller article
- here's the Wachler article