Healthcare News & Insights

CMS offers deal for postponed RAC appeals — but there’s a catch

The Centers for Medicare & Medicaid Services (CMS) shut down its recovery audit contract (RAC) program because of a massive backlog of appeals. Now it’s offering a deal to hospitals to reduce the backlog, but should your facility take the bait? 

474237059It’s been a strange year for the RAC program. In February, CMS announced that it would be shutting down the program so it could procure new contracts, run out the old ones and reform the program. CMS also needed time to work through a giant backlog of claims appeals the RAC program brought with it. Currently the appeals process could take up to five years for some hospitals, tying up facilities’ valuable resources.

Return of RACs

But then CMS unexpectedly decided to revive the program.

Instead of signing new contracts, CMS modified the old ones in order to conduct more audits. This time around, most of the audits are automated with some complex reviews being conducted on claims for:

  • spinal transfusions
  • outpatient therapy services
  • durable medical equipment
  • prosthetics
  • cosmetic procedures, and
  • orthotics and supplies.

Initially, this was only supposed to last until CMS finished finding new contractors, but a lawsuit is postponing that plan, as Fierce Health Finance reports.

One of the current RACs sued CMS, complaining that awarding new contracts was arbitrary and objecting to the revised payment methodology CMS was proposing. And though the court initially sided with CMS, the lawsuit is currently in the appeal process. As a result, the judge agreed to postpone awarding new RACs until all the court proceedings finished.

Since that probably won’t be until sometime in 2015, there won’t be any new RACs until closer to 2016.

Deal to reduce appeals

But there is some good RAC news for hospitals (depending on how you look at it).

CMS is hoping to reduce the amount of inpatient appeals in its system by offering a deal to acute care and critical access hospitals. In exchange for withdrawing its appeals, CMS announced it’ll pay hospitals 68% of the total allowable amount.

Any facility that wants to take the deal will have to file a settlement agreement by the end of October. Hospital leaders should evaluate whether or not the deal is good fit for their facility by looking at how long their appeal might take and how much revenue is at stake.

CMS promises to payout within 60 days of receiving settlement agreements. But there’s something else to keep in mind: If an administrative law judge or board of appeals finds any errors in the settlements, CMS could take back portions of the payment for any ineligible claims.


Subscribe Today

Get the latest and greatest healthcare news and insights delivered to your inbox.