Providers should take notice of the new developments regarding the permanent recovery audit contractor (RAC) program and how these changes will affect their preparation for the permanent RAC program rollout. Following the CMS announcement identifying the four RACs chosen for the permanent RAC program, two unsuccessful bidders, Viant, Inc. and PRG-Schultz USA, Inc., filed protest with the Government Accountability Office (GAO). As a result, CMS has been forced to impose an automatic stay in the contract work of the four permanent RACs until a determination is made by GAO, as required under provision of the Competition and Contacting Act of 1984 (CICA). Under the CICA, GAO has 100 days to issue its decision, which means a decision would be due for these protests in early February. Since the four RAC contracts and any work under those contracts is on hold pending the outcome of the protests, CMS officials have stated that the RAC implementation schedule likely will be delayed.

Providers should take advantage of the possible delay to the RAC permanent program rollout by familiarizing themselves with recent updates to the program. In an attempt to reduce some of the burden placed on providers responding to medical records requests during the demonstration program, CMS has established limits on the number of medical records that can be requested by RACs in a 45-day period. For example, RACs may request from hospitals a maximum of 200 medical records per NPI in a 45-day period, further limited to no more than 10 percent of average monthly Medicare paid claims in the 45-day period. In addition, on December 12, 2008, CMS posted instructions on the RAC Recent Updates page of the CMS website for providers with questions on claims reviewed by a RAC during the RAC demonstration. CMS requests providers with inquires regarding claims reviewed during the RAC demonstration to e-mail CMS and reminds providers not to include personal health information in the e-mails.

On January 5, 2009, CMS released the second update to its July 2008 report on the three-year RAC demonstration program. The update includes appeals statistics through August 31, 2008. According to the second update, providers appealed 22.5 percent (118,051) of RAC determinations, and of those, 34 precent (40,115) were overturned in favor of providers. The proportion of RAC demonstration denials (525,133) overturned on appeal increased to 7.6 percent. CMS is still unable to determine the number of appeals at the first level and will continue to update the report until all appeals have completed the Medicare appeals system