The CMS had planned to award new contracts to companies that act as Medicare’s recovery audit contractors (now referred to as “recovery auditors” or RAs) for operation of the Medicare recovery audit program in the hospital sector by the end of 2014, which would have concluded the procurement process for new contracts that began in May 2013. However, in familiar fashion, CMS announced recently that due to continued delays in awarding the new contracts, the existing contracts for the four private companies that currently act as Medicare’s RAs (namely, CGI Federal, Connolly, HealthDataInsights, and Performant Recovery) would be extended through calendar year 2015. Along with the delay of the new contract for DME and home health and hospice providers awarded December 30, 2014, to Connolly, a post-award protest of that contract caused CMS to modify the existing RA contracts to allow the Medicare RAs to resume certain reviews that had stopped in 2014 pursuant to the old contracts’ terms. The existing work under the old contracts was extended with CMS through April 2017, to finalize all appeals and reconciliation.

Unfortunately, the contract extensions and modifications granted by CMS further delay CMS’s efforts to usher in the next phase of the recovery audit program, and leave hospital providers waiting at least another year for long-promised and much-needed program improvements. Looking ahead to the next phase of the recovery audit program, we have highlighted some of the program changes in the table on page five, published by CMS after evaluation of the multitude of concerns raised about the existing program, which are aimed at reducing the administrative burdens associated with the program and increasing program oversight and transparency. The new requirements will be incorporated into all new RA contract awards, and will be effective for any RA activities performed under new contracts entered into on or after December 30, 2014.

Even after the new contracts incorporating these program improvements become effective and begin to have an impact, hospitals will continue to encounter the considerable administrative burdens and related challenges that result from the current environment of aggressive auditing activities by multiple government program contractors and other payors. Past practices, trends, and approved audit issues with the recovery audit program serve as a good indicator that certain providers and service areas will continue to receive special attention from the RAs. Hospitals should closely monitor sources which reveal those trends and should continue to focus on their facilities’ practices which have previously been considered high-risk areas by the RAs. One of those sources is the Connelly Consulting, Inc., website. Connelly is the primary RA with jurisdiction over Region C, which includes North Carolina providers. The Connelly website provides a complete list of issues that CMS has approved for RA audit, which may be accessed at Another
valuable source is the 2015 Work Plan published by the Office of Inspector General (OIG) for the United States Department of Health and Human Services, which may be accessed at

An analysis of past or current issues approved by CMS for RA review for North Carolina hospitals reveals that often North Carolina hospitals are included in the review of a specific billing issue because the state has the highest number of inpatient days of any of the states in Region C, its RA jurisdiction region. The RA then selects the initial claims for review based upon an analysis which identifies claims billed with the top Medicare Severity Diagnosis (MS-DRG) on the most recent Comprehensive Error Rate Testing (CERT) report. Examples of approved issues for RA review in North Carolina include minor surgery and other treatments billed as inpatient stays; esophagitis, gastroenteritis, and miscellaneous digestive disorders with or without major complications (MS-DRG-391 and 392); diabetes with or without major complications or comorbidities (MSDRG-637, 638, and 639); and other vascular procedures without multiple complications or comorbidities (MS-DRG-254).

Maintaining an awareness of current audit issues and giving special attention to potentially vulnerable practice areas should be viewed as essential to hospitals’ provider action plans to avoid being targeted for audit and to ensure an effective response if they are audited. Whether your facilities are analyzing regulatory requirements and changes, reviewing compliance policies and procedures, formulating best practices, assessing any rights and duties, or preparing a response plan post-audit notice, involvement of experienced legal counsel can be an important resource to work with hospital staff prepared and trained to deal with the burdens of auditing activity.

Click here to view the table.