The RACs Are Back at Long Last


There’s an old saying that all things come to those who wait, and after watching the Chicago Cubs win the World Series, there’s no question it’s true. It also applies to Medicare, which recently awarded all five recovery audit contractor (RAC) contracts after a nearly three-year delay.

I spoke to a few health-care attorneys who all seemed to agree that the new contracts will signal an increase in RAC reviews. Judy Waltz, an attorney with Foley & Lardner in San Francisco, said there might be a little lag as the new RACs get up to speed, but said they’re sure to ramp up their activity quickly.

Waltz also said it was significant that Medicare awarded a RAC dedicated to reviewing durable medical equipment and home health/hospice claims, which she said indicates those areas will be subject to more audits and enforcement.

The five contracts were awarded to Performant Recovery Inc., Cotiviti Inc. and HMS Federal Solutions, with Performant serving as a traditional RAC as well as focusing on durable medical equipment and Cotiviti being selected to cover two regions. The RAC program is designed to find and recover improper Medicare payments.

Melissa Myers, senior associate director of policy at the American Hospital Association, told me she expects the new RACs will continue to be a burden for hospitals. “Barring a full-scale reform of the flawed contingency-fee payment structure that incentivizes RACs to deny claims, we foresee continued behavior by the RACs that have imposed an administrative and financial burden on hospitals and led to the overwhelming backlog the Medicare appeals system is buckling under today,” Myers said.

Kristin Walter, a spokeswoman for the Council for Medicare Integrity, a RAC trade association, said the council was pleased with the contract awards and said it points to a renewed commitment from Medicare to tackle improper payments. Walter said RACs are essential in preserving the financial integrity of the program, according to a statement.

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