RACs Fight CMS Changes to Contracts

Two recovery audit contractors have filed “pre-award” protests with the Government Accountability Office (GAO), regarding some of the changes planned by CMS for the next round of the five-year RAC contracts. The protests have to be ruled on before CMS can award the next round of RAC contracts. CGI Federal and HMS Holdings (which owns HealthDataInsights) object to CMS’s changes to the next RAC installment.  CMS said it would, among other things, revise the number of medical records that RACs can request from providers, reducing them for providers with low claim denial rates, and not pay RAC contingency fees for overpayments until it was clear they would survive the second level of appeal. Currently, RACs receive their contingency fees after the first level of appeal. The item causing the most consternation is the contingency fee issue. Appeals at the first level take about 100 days, so if RAC denials survive, they get paid in a few months. Moving the contingency payment until after the second level of appeal would increase receivables to 400 days.  For their part, providers don’t think RACs should get their contingency fees until the verdict comes down at the third level of appeal, where overburdened administrative law judges decide cases, sometimes taking two years. The protest affects all four RAC jurisdictions.