The wait is over. On February 6, 2009, the Center for Medicare & Medicaid Services (CMS) announced that the permanent Recovery Audit Contractor (RAC) Program is back on track. The bid protests filed by two companies have been withdrawn, which means the program is no longer suspended and will move forward.

In light of the resolution of the bid protests, CMS has updated its RAC expansion schedule:

  • Wave 1: Scheduled to start on March 1, 2009 - States of Indiana, Michigan, Minnesota and others;
  • Wave 2: Scheduled to also start on March 1, 2009 - States of Oklahoma, Texas, Nevada and California; and
  • Wave 3: Scheduled to start on August 1, 2009 - States of Ohio, Illinois, Kentucky and others.

In the near future, provider outreach meetings will be held with the RACs and CMS representatives. The outreach meetings will be scheduled through the state hospital associations, which indicates that the initial focus of the RACs will likely be hospitals and health systems. Shortly after these outreach meetings, the RAC audits will begin and providers can expect to start receiving record requests and overpayment demand letters from the RACs.

Under the RAC Program, the RACs will perform two types of audits, which will focus on both coding and medical necessity. The first is an automated review covering data only (no medical records) and is designed to identify clear instances of inappropriate payments, such as duplicate payments. The second type of review is a more detailed review where there are likely or potential errors. During a detailed review, RAC contractors will request medical records from providers, and the providers will have only 45 days to produce the records. If the RAC contractors identify improper payments, the provider will be able to appeal the determination, but strict deadlines apply.

Because the RAC Program will soon be back in full gear, providers need to finalize their preparations for the RAC audits, including identifying an internal RAC response leader, assembling a RAC response team and conducting RAC training sessions.

Being prepared for the RAC audits and potential appeals will have numerous benefits. Prepared providers will spend less money responding to audit requests, be better positioned to challenge questionable determinations, be prepared to file timely appeals and will encounter less overall disruption in their day-to-day operations.