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Get Ready: The RAC Program Soon May Be Expanding

As Medicare providers and suppliers are acutely aware, the Centers for Medicare and Medicaid Services (“CMS”) has determined that the use of Recovery Audit Contractors (“RACs”) is a “cost-effective” way to identify and correct improper payments, in part as a result of the contingency-fee-based structure of using these auditors. Primarily because of the program’s cost-effectiveness, Section 302 of the Tax Relief and Health Care Act of 2006 made the RAC program permanent required its operation nationwide.

The RAC program soon may be expanding even more. In Section 6411 of H.R. 3590, the “Patient Protection and Affordable Care Act” (i.e., the health care reform bill), Congress has proposed to expand the RAC program, specifically the use of contingency-fee-based RAC contractors, to audit not only Part A and Part B Medicare claims, but also to review Medicare Advantage (Part C), Medicare Prescription Drug (Part D) and Medicaid claims. This bill is in line with a recent White House Memorandum which states President Obama’s support of the use of “high-tech bounty hunters” to help find health care fraud in government-run Medicare and Medicaid programs.

The House of Representatives passed H.R. 3590 on March 21, 2010. The bill was approved by the Senate last December and was signed into law today, March 23, 2010. It is unclear which provisions will survive a separate “compromise package of changes” to the bill.

The HLP will continue to provide updates as any changes to the RAC program are adopted and implemented.

For more information on the RAC program, please contact Abby Pendleton, Esq. or Jessica L. Gustafson, Esq. at (248) 996-8510.

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