CMS Names Recovery Audit Contractor for Home Health

Home health agencies now know who will be performing controversial recovery audits on their Medicare claims. The Centers for Medicare & Medicaid Services (CMS) has chosen its second round of national Recovery Audit Contractors (RACs), including the first-ever that will be focused exclusively on durable medical equipment, home health, and hospice (DME/HH-H) claims.

Five contracts have been awarded, four of which will focus on different regions of the country and the fifth, California-based Performant Recovery, Inc. will focus on auditing DME/HH-H claims nationwide, according to an update from the Centers for Medicare & Medicaid Services (CMS).

The Medicare FFS Recovery Audit Program began in 2003 as a demonstration required in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.


The demonstration, which officially began in 2009, created a type of auditor that reviews Medicare claims after they already have been paid out to providers, to identify and recover improper reimbursements.

Providers have harshly criticized the RAC program. Among the complaints: auditors only receive payment for the cases where they find instances of Medicare overpayment, which providers say creates incentives for them to be overly aggressive. Many providers appeal the claims made by the RAC, which resulted in a massive backlog of appeals.

The program has essentially been in a pause as the RACs have been barred from auditing short-term hospital stays—one of their primary targets—and CMS has been caught up in a legal case that has delayed this round of contracts from being awarded.


On the other side of the coin, the trade group representing RACs has argued that they serve a crucial function in keeping Medicare solvent, and praised the new contracts being awarded.

“Medicare loses more money to waste than any other federal program, with a billing error rate well above the legal threshold for 10% for the past three years in a row,” Kristin Walter, spokesperson for the Council for Medicare Integrity, said in a press release. “With Medicare’s solvency in serious jeopardy due to a loss of more than $150 billion in taxpayer dollars over the last three years, renewing the work of the RAC program to balance the program’s checkbook is essential to protecting Medicare’s future fiscal health.”

Along with the newly appointed RACs, CMS has implemented new payment parameters for the program. Previously, RACs were able to review inpatient claims that went as far back as three years, now they will only be allowed to go back as far as six months, CMS said.

Since the program began in 2009 though, RACs have retrieved $8 billion in improper payments, according to CMS.

Home health agencies may recall that a firm called Connolly was awarded the home health RAC contract. However, due to the legal challenge CMS faced, the agency re-bid the contract.

“Connolly (now Cotiviti) previously won a DME/HHH contract during an earlier procurement,” Walter told Home Health Care News. “This was later recalled due to an overall procurement protest by [RAC] CGI regarding payment terms. The protest went through the courts and it was determined the CMS should rebid the contracts, which they did with the new payment parameters.”

The implementation of the newly-awarded contracts has not yet begun, but will likely begin after CMS conducts initial meetings in November, Walter said.

Written by Alana Stramowski

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