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Updated on: June 22, 2012

RAC Dispute Outcome Expected Next Week

Original story posted on: February 2, 2009


The outcome of a dispute between two unsuccessful bidders for the Recovery Audit Contractor program and The Centers for Medicare & Medicaid Services is expected next week, RACMonitor has learned.


A spokesperson for the Government Accountability Office (GAO) told RACMonitor that a decision is expected sometime during the week of February 9. The spokesperson would not speculate on a possible outcome, although one of two options appears likely - the GAO would rule in favor of CMS and the program would roll out, or the GAO would order the contracting process be re-opened.


On November 4, 2008, the GAO issued an automatic stay on the national rollout of the RAC program. RACs were scheduled to launch a program of provider education at that time. The GAO action came on the heels of a protest filed by PRG-Schultz USA, Inc. (PRG), and Viant, Inc., both of which lost in the bidding for RAC contracts. PRG, a RAC contractor during the demonstration, covered California and Arizona and collected $330.5 million in improper payments, according to CMS reports.


Under provisions of the Competition and Contracting Act of 1984 (CICA), the GAO had 100 days in which to review the protest and reach a decision.


Just one month earlier, in October, CMS formally announced its selection of permanent contractors and provided details of its launch on its Web site.

The four permanent RAC contractors include the following:


  • Diversified Collection Services, Livermore, Calif., which would initially cover Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont

  • CGI Technologies and Solutions, Fairfax, Va., for Indiana, Michigan and Minnesota

  • Connolly Consulting Associates, Wilton, Conn., for Colorado, Florida, New Mexico and South Carolina

  • HealthDataInsights, Las Vegas, Nev., for Arizona, Montana, North Dakota, South Dakota, Utah and Wyoming


Additional states will be added to each RAC region in 2009, according to CMS.


Before the stay had been initialized, CMS was advising providers to conduct internal assessments to ensure that submitted claims meet Medicare rules. Other steps CMS advised at the time included:


  • Identifying where improper payments had been persistent by reviewing the RACs' Web sites and identifying any patterns of denied claims within their practices or facilities.

  • Implementing procedures to respond promptly to RAC requests for medical records.

  • Filing appeals before the 120-day deadline in the case that a provider disagrees with the RAC determination.

  • Keeping track of denied claims and correcting previous errors.

  • Determining what corrective actions need to be taken to ensure compliance with Medicare's requirements and to avoid submitting incorrect claims in the future.


The 3-year RAC demonstration program in California, Florida, New York, Massachusetts, South Carolina and Arizona collected over $900 million in overpayments and nearly $38 million in underpayments returned to health care providers.

Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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