CMS to Create New National RAC for DMEPOS, Home Health

CMS recently announced their intent to create a fifth Recovery Audit Contractor (RAC), in addition to the four current regional RAC’s. This new national contract would be awarded specifically for identifying improper payments for home health, hospice claims and payments for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). The new national RAC will become active in early 2014.

The existing four RAC regional contractors will remain in place, but will focus on all other claims for Part A and B. As part of this new RAC program, CMS will require audit contractors to “support” CMS in the administrative appeals process and, if necessary, in appeals to federal court. Recovery Auditors must provide supporting documentation, including statutory and regulatory justifications, manuals and instructions for appealed claims. RAC’s will now also be required to represent CMS at “any hearings associated with the overpayment when requested by CMS.” Specifically, the new language in the Statement of Work (obtained by for RAC contractors states that RAC’s must participate and take party status in 25% of cases that reach the administrative law judge (ALJ) level.

The new agreement would also reduce the time frame for completing claims reviews, from 60 to 30 days, and will provide CMS the ability to sever ties with a contractor that does not follow the new guidelines. 

While this announcement begins to address some of the O&P providers issues with a lack of CMS oversight of the independent audit contractors, there is still much more that needs to be addressed. Ensuring RAC’s have a financial liability in the form of representing CMS at appeals hearings is a good first step and will hopefully lead to RAC’s becoming more selective on the claims they identify as improper, and the extrapolations that commonly follow.

The contract for a national RAC for DMEPOS, home health and hospice claims is scheduled to become active in early 2014 and run through 2018.

OPGA will continue to monitor this new effort and will provide updates as they become available.

This entry was posted in Orthotics and Prosthetics, Prosthetist, re provider and tagged , , , , . Bookmark the permalink.

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