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The 2010 OPPS final rule released on October 30 contains few surprises, but does finalize two changes that received considerable attention when CMS proposed them.
“The information CMS has finalized for physician supervision and drug reimbursement are two key areas for hospital review, though for slightly different reasons,” says Jugna Shah, MPH, president of Nimitt Consulting in Washington, DC.
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CMS yesterday announced it has delayed the Medicare Recovery Audit Contractor (RAC) permanent program and put a moratorium on all RAC-relayed informational sessions across the country. CMS has yet to release further details but told the American Hospital Association the action was necessary due to “a RAC protest and a stay of performance.”
However, the California Hospital Association (CHA), in a memorandum obtained by HCPro., Inc, says that PRG Schultz (PRG), a contractor that submitted a bid for work in the permanent program but wasn’t selected as one of the four permanent contractors, was considering a challenge to the contract award process.
Despite the delay in the process, Joseph Zebrowitz, MD, executive vice president of Executive Health Resources in Newtown Square, PA, warns facilities not to change anything in terms of preparing for a RAC visit. The permanent program will not change, he says.
“Basically, this is infighting amongst CMS potential contractors who are upset that they were not awarded the RAC contract,” Zebrowitz says. “I think it is important that this delay is not because of any question of whether the RACs are fair, or good, or legal. The RAC program is unchanged, and there is nothing out there to say that anything is going to be different. [CMS] just can not start when the contractors are in doubt. Once they resolve these complaints, they will start up.”
Zebrowitz guessed the delay would take 30 to 60 days.
PRG Schultz, which had the lowest percentage of appeals overturned in the demonstration project (2.1%), boasted last month of netting one of the highest technical scores in the demonstration project. It said CMS denied its contract because of its high contigency fee bid.
Monday, CMS ordered a blanket shutdown of all RAC activity, including its informative sessions (one in New Hampshire was stopped mid-conference yesterday, CHA says). The Healthcare Association of New York (HANYS) said a RAC videoconference briefing scheduled for Wednesday through the state was canceled.
CMS had announced the new RACs for its permanent nationwide program Monday, October 6. The four contractors and their selected regions are:
- Diversified Collection Services, Inc. of Livermore, CA: Region A, initially working in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and New York.
- CGI Technologies and Solutions, Inc. of Fairfax, VA: Region B, initially working in Michigan, Indiana and Minnesota.
- Connolly Consulting Associates, Inc. of Wilton, CT: Region C, initially working in South Carolina, Florida, Colorado and New Mexico.
- HealthDataInsights (HDI), Inc. of Las Vegas, NV: Region D, initially working in Montana, Wyoming, North Dakota, South Dakota, Utah and Arizona.
CMS said it chose the contractors and their regions based on three values:
- A “best value determination” that includes a strong technical approach and “exceptional” customer service
- Conflict of interest reviews
- Lowest contingency fee
CMS also announced last month how much money RACs will make from provider overpayments. The RACs get paid “contingency fees” based on the amount of the improper payments they correct for both overpayments and underpayments.
“Each RAC’s contingency fee is established during contract negotiations with CMS and, as such, the contingency fee varies for each RAC,” CMS said.
The contingency fees breakdown as follows:
Region A: 12.45%
Region B: 12.50%
Region C: 9%
Region D: 9.49%
CMS announced the new Medicare Recovery Audit Contractors (RACs) for its permanent nationwide program Monday, October 6. The four contractors and their selected regions are:
- Diversified Collection Services, Inc. of Livermore, CA: Region A, initially working in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and New York.
- CGI Technologies and Solutions, Inc. of Fairfax, VA: Region B, initially working in Michigan, Indiana and Minnesota.
- Connolly Consulting Associates, Inc. of Wilton, CT: Region C, initially working in South Carolina, Florida, Colorado and New Mexico.
- HealthDataInsights (HDI), Inc. of Las Vegas, NV: Region D, initially working in Montana, Wyoming, North Dakota, South Dakota, Utah and Arizona.
CMS said it chose the contractors and their regions based on three values:
- A “best value determination” that includes a strong technical approach and “exceptional” customer service
- Conflict of interest reviews
- Lowest contingency fee
Connolly and HDI worked on the initial RAC demonstration project that spanned over six states, collected more than $900 million in overpayments, and returned nearly $38 million in underpayments to healthcare providers, according to a CMS press release.
PRG denied contract
CMS said it chose not to select PRG-Schultz (PRG), which had the lowest percentage of appeals overturned in the demonstration project (2.1%). CMS had awarded PRG the California contract. In a press release, PRG said it received one of the highest technical scores but was denied a permanent contract because of its high contingency fee bid.
Tanja Twist, director of patient financial services at Methodist Hospital in Arcadia, CA, said she is “very glad to see that PRG wasn’t selected as one of the ‘Permanent 4’ given their track record here in California.” The California Hospital Association released a memorandum in July citing several concerns over PRG’s work on inpatient rehabilitation facilities (IRFs).
Lowdown on returnees
CMS reports through June 30, 2008 that HDI led all contractors in the demonstration project with 239,205 overpayment determinations. Providers have been the most successful with appeals against HDI (11.5%). Connolly was second with 110,635 and had 4.2% overturned on appeals.
CMS did not release information on the two new RACs – Diversified Collection Services (DCS), Inc. and CGI Technologies and Solutions, Inc. However, the federal government is familiar with DCS. In fiscal year 2007, the government awarded them $36,590,770 in contracts, according to www.fedspending.org, the Freedom of Information Web site on government spending.
Getting prepared
Facilities need to plan immediately for the RACs’ arrival, said William Malm, ND, RN, partner at Health Revenue Integrity Service LLP. Connolly, which had the New York contract in the demonstration project, and HDI, which had the Florida contract in the demonstration program, will not be in those states for the permanent program. So those providers in the demonstration states should be prepared for a different contractor in the permanent program.
The new RACs will begin to educate and inform providers later this month and in November about the program, CMS said. Kimberly Anderwood Hoy, JD, CPC, director of Medicare and Compliance for HCPro, Inc., said one of the new elements of the permanent program is the RAC Validation Contractor, which will approve issues for review by the new RACs. In addition, the contractors will create a Web site to post new topics the RACs are investigating.
NYU Medical Center worked with Connolly during the demonstration project. Robert Tipton, NYU’s RAC liaison and its director of inpatient revenue cycle operations, said Connolly established a solid working relationship with the hospital during the process. Stacey Levitt, RN, MSN, CPC, director of patient care management at Lenox Hill (NY) Hospital, agreed.
“This might sound contradictory, as the RAC’s primary function is to identify overpayments and potentially recoupment money from the hospitals,” Tipton said. “But the reality is that the RAC is here to stay, and creating a working, professional relationship benefits both sides at the end of the day.”
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