Updated on: June 22, 2012

Who’s Really Behind the RACs?

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Original story posted on: December 17, 2008

leodorazio120dsBy: Leo D'Orazio, MBA, FACHE

When the long-awaited announcement came, healthcare providers knew that CMS was on track to move the Recovery Audit Contractor program from the demonstration phase to a national rollout.  On October 6, 2008, CMS selected four permanent RACs and made it clear that the RACs were selected by way of a competitive bidding process.

 

According to CMS:

“The new RACs were selected under a full and open competition. The selection of the new contractors was based on a best value determination for the Federal government that included a sound technical approach for the level and quality of claim analysis and detail to exceptional customer service, conflict of interest reviews and lowest contingency fee.”
Permanent RACs and the states in which they will be initially working include the following:

 

Diversified Collection Services, Inc. of Livermore, California
Region A

  • Maine
  • New Hampshire
  • Vermont
  • Massachusetts
  • Rhode Island
  • New York

 

CGI Technologies and Solutions, Inc. of Fairfax, Virginia
Region B

  • Michigan
  • Indiana
  • Minnesota

 

Connolly Consulting Associates, Inc. of Wilton, Connecticut
Region C

  • South Carolina
  • Florida
  • Colorado
  • New Mexico

 

HealthDataInsights, Inc. of Las Vegas, Nevada
Region D

  • Montana
  • Wyoming
  • North Dakota
  • South Dakota
  • Utah
  • Arizona

CMS reports that additional states will be added to each RAC region in 2009.

 

Diversified Collection Services, Inc. of Livermore, California

On November 17 2005, Performant Financial Corporation launched its new corporate identity in a news release and said that it would be the parent company for a group of businesses focused on “delivering trusted advisory services and technology solutions to public and private sector customers across the healthcare, education, and collections industries.”

In the news release, Performant identified four core businesses as DCS (Diversified Collection Services), Performant Audit & Recovery, VFI (Vista Financial Inc.) and Performant Hosted Services. The news release noted that each of the businesses was “rooted in the accounts receivable management industry, where the company has 30 years of industry leadership.”

Performant also described DCS asthe premier provider of debt repayment services on behalf of state and federal government agencies, as well as many commercial organization,” saying that DCS “has unique expertise in recovering unpaid student loans, delinquent federal and state taxes, and even outstanding non-tax debt.”

In addition, Performant reported “DCS currently handles an inventory in excess of $40 billion and has successfully recovered more than $4 billion for clients over the past 30 years.”


 

CGI Technologies and Solutions, Inc. of Fairfax, Virginia

Publicly trade CGI Technologies and Solutions announced on October 14, 2008 that it had been awarded a RAC contract for Region B, noting that the area included seven Midwestern states. In a news release, the company said the contract would have “potential for significant revenue” over the five-year period based on results of the RAC pilot program.

CGI said its engagement would focus on outreach to providers, identification of improper Medicare payments through automated and complex reviews, recovery of overpayments, coordination with other Medicare contractors, and clear communication of audit findings to providers.

“The RAC award is a key step in protecting the integrity of the Medicare Trust Funds,” said Rick Schmitz, Senior Vice-President, CGI. “We are committed to supporting CMS’s ongoing mission to ensure effective, up-to-date health care coverage and to promote quality care for beneficiaries. The CMS-CGI partnership is strong and we will continue contributing to CMS’ vision to transform and modernize America's health care system.”

 

Connolly Consulting Associates, Inc. of Wilton, Connecticut

Having been one of the original RACs in the pilot program, Connolly Consulting Associates announced its contract on October 9, 2008, saying that the firm “contributed the to the $693.6 million in improper Medicare payments returned to the Medicare Trust Funds between 2005 and March 2008.” At the time, Connolly was responsible for audit activities in New York and Massachusetts.

In the national program, Connolly said the states in Region C, which the firm will cover, “account for roughly 38 percent of Medicare disbursements annually.”

Said the firm’s president Mike Sick, "Connolly has effective mechanisms in place to detect and respond to improper payments, and is also experienced with the rules, regulations, and requirements that must be applied when evaluating suspected improper payments.


 

HealthDataInsights, Inc. of Las Vegas, Nevada
Returning to the permanent program for a second time will be HealthDataInsights  (HDI), which, in March 28, 2005, was awarded a RAC contract, according to the company’s Website. The company would be responsible for recovery of overpayment of Medicare’s fee-for-service claims filed in Florida from late 2001 through the fall of 2007.


The company’s Website says… “Applying its sophisticated technology platform developed over the course of more than a decade, HealthDataInsights works with healthcare payers to ensure that providers have been reimbursed accurately for care provided. HDI is engaged by public and private healthcare payers, as well as third party administrators and self-insured corporations, to analyze 100% of paid medical claims and to identify and recover overpayments resulting from error as well as fraud or abuse (“Claims Integrity Services”).


Although the start date for the national rollout has yet to be announced, at least now providers will know who will come knocking.


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Mr. D'Orazio is the Managing Director Healthcare for Withum Smith + Brown

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