WASHINGTON – Now that the Medi­care Recovery Audit Contractor, or RAC, program is rolling out nationwide, officials from the Centers for Medicare & Medicaid Services say they want to make the program less burdensome for providers.

George Mills, director of the provider compliance group at the CMS Office of Financial Management, said the federal government collected $1 billion under the RAC demonstration project, conducted 2005-2008 in California, Florida, South Carolina and New York.

From the CMS perspective, the demo was successful, but Mills says that lessons were learned and improvements can be made.

“I’m not going to say the demo was perfect,” he said. “That’s what a demo is. We learned a lot and we made some changes.”

While RACs are charged with finding Medicare underpayments to providers as well as overpayments, providers are understandably concerned that RACs will behave like bounty hunters, going after what they perceive are the “easy targets” in order to increase their contingency fees.

The contractors in the nationwide RAC program will receive 10 percent of what they collect, half of the 20 percent they received in the demonstration project.

As of fall 2009, RACs in all four regions of the United States have begun audits.
Diversified Collection Services, the Medicare recovery audit contractor for Region A, was the last of the four contractors to launch RAC audits.

Region A consists of Connecticut, Delaware, the District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.
Audits began in August 2009 in the other three RAC regions.

CGI Technologies and Solutions, Inc., of Fairfax, Va., launched audits in Region B, consisting of Indiana, Michigan, Minnesota, Illinois, Kentucky, Ohio and Wisconsin.

Connolly Healthcare, of Atlanta, initiated RAC audits in region C, targeting physicians and hospitals in South Carolina, Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, Puerto Rico and the U.S. Virgin Islands.

HealthDataInsights, Inc., of Las Vegas, the Medicare recovery audit contractor for region D, began audits in Alaska, Arizona, California, South Dakota, North Dakota, Hawaii, Idaho, Iowa, Kansas, Missouri, Montana, Nebraska, Nevada, Oregon, Utah, Washington and Wyoming.

RACs will be required to review Medicare claims as far back as Oct. 1, 2007 at first, with a maximum three-year look-back going forward. They will use the same policies that the Medicare Administrative Contractors and fiscal intermediaries use, based on CMS manuals.

Automated reviews will only be conducted on simple, obvious claims, such as surgery performed on the same day for the same procedure, Mills said. Complex reviews will require documentation requests from providers and will take longer.

CMS has hired a review contractor to do a periodic monthly review of the RACs’ decision-making to ensure accurate decisions.