The Texas Health and Human Services Commission (HHSC) recently announced a tentative contract award for the Texas Medicaid Recovery Audit Contractor (RAC) contract to both CGI Federal, Inc. and Health Management Systems, Inc. (HMS). As noted in the April 26, 2012, issue of the Health Law Update, HHSC had previously announced a tentative award to CGI in February; however, HHSC later withdrew the announcement to request additional information from vendors, cancelled the request for proposal (RFP) and released a new RFP in June 2012. The current award is contingent upon the successful contract negotiation, and if finalized, Texas will be one of a handful of states that has awarded its RAC contract to multiple contractors.

Per the RFP, RACs will be hunting improper payments that include: (1) duplicate payments, (2) pricing errors, (3) payments for services not provided, (4) payments for noncovered services, or (5) any other errors resulting in improper payments. Claims reviewed or under review by the HHSC Office of Inspector General (OIG) or associated with an audit already underway will be excluded from the population subject to RAC audits. The RFP proposes a three-year look-back period unless a different time frame is authorized by HHSC. The RFP also contemplates that RACs will be using statistical sampling "when the RAC believes that the outcome maximizes the overpayments that will be identified."

The initial term of the contract is expected to run from about September 1, 2012, through August 31, 2015. HHSC anticipates the RACs' initial reports on potential recoveries will be submitted to HHSC approximately 3-4 months after the contract start-date.