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CMS Announces Plans to Introduce a Fifth RAC for DME and HHH

The Centers for Medicare & Medicaid Services (CMS) plans to make significant changes to the Recovery Auditor (RAC) program. In doing so, CMS hopes to address providers’ complaints and improve the RAC program through new Recovery Auditor contracts that will be awarded next year.

The most significant change is the creation of a fifth, nationwide Recovery Audit Contractor that is solely responsible for the identification and correction of improper payments for home health and hospice claims and payments for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). The change leaves the existing four regional RACs in place to identify overpayments for all other Medicare A/B claims and provider types.

In the Statement of Work for DME and Home Health Recovery Auditors, CMS claims that the changes will further the Recovery Audit Program’s goal of “efficient detection and correction,” and assist the Agency in “lowering future error rates and identifying improper payments that will have the greatest impact on the [Medicare and Medicaid] Trust Fund.”

Further, all Recovery Auditors will now be required to “support” CMS in the administrative appeals process and, if necessary, in appeals to federal court. Recovery Auditors must provide supporting documentation, including statutes, regulations, manuals and instructions. The RACs will also be required to represent CMS at “any hearings associated with the overpayment when requested by CMS.” Specifically, the new Statement of Work states that RACs must participate and take party status in 25% of cases that reach the administrative law judge (ALJ) level.

These changes, among others, will be implemented through CMS’ new recovery auditor contracts in early 2014. The new RAC contract period will run through 2018, and we suggest that all Medicare and Medicaid providers read through the modified RAC Statement of Work and also the new Statement of Work for DME, home health and hospice recovery auditors.

If you have any questions regarding how CMS’ changes to the recovery audit contractor program affects your healthcare entity, or otherwise need assistance with Medicare or Medicaid recovery audits, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.