Coming soon: Nat'l RAC just for home health, DME

BALTIMORE - CMS plans to make changes to the recovery audit contractor (RAC) program that could intensify audit activity for DME providers, sources say.

CMS plans to create a fifth RAC specifically dedicated to identifying overpayments for home health, hospice and DME nationwide, according to a request for proposal and a statement of work issued by the agency.

“Obviously, we're going to see another increase in the volume of audits being done,” said Wayne van Halem, president of The van Halem Group. “The current RACS are being criticized for a lack of work in home health and DME, and CMS sees a propensity for high error rates in these areas, so that's why we're seeing the expansion.”

Four RACs will continue to identify overpayments in Regions A, B, C and D, but they will focus on hospitals and other healthcare providers. CMS plans to have the new structure in place in 2014.

Having one RAC dedicated to DME may also mean, instead of staggered audits, providers get hit all at once, sources say.

“There may be an increase in administrative costs to respond to all of the requests in a timely manner, especially for providers that supply items nationally,” said Sylvia Toscano, owner of Professional Medical Administrators.

A possible benefit of having one RAC dedicated to DME, sources say: a staff that develops an expertise in this area and, therefore, interprets guidelines more consistently.

“The only bright spot I see is that, maybe, if this is all they have to focus on, they may make better decisions,” van Halem said.

CMS also plans to require that the RACs play a larger role in the appeals process, a move that sources fear will reduce the number of denials that are overturned.

“I believe more decisions are going to stand in the appeals process,” said Kelly Wolfe, CEO of Regency Billing and Consulting. “The RACs are making money to deny claims and they're going to fight to keep that money.”