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Requires the expansion of the RAC program to Medicaid (with applicable regulations to be promulgated by HHS) and Medicare Parts C and D (with special requirements delineated) by December 31, 2010. Calls for CMS to submit an annual report to Congress concerning the effectiveness of the RAC program under Medicaid and Medicare including recommendations for expanding or improving the program.
Prior to January 2013, CMS in December of 2010 issued a request for information in which it solicited comments on the expansion of the RAC program pursuant to this provision. In the fall of 2011, CMS issued a final rule implementing this provision to Medicaid and providing guidance to states relative to funding (including start-up and operation costs), and so forth. CMS also issued a report to Congress in FY 2011 on the status of the program, including the expansion called for by the ACA. According to the FY 2011 report to Congress, in September 2011, CMS awarded a Data Validation Contract (DVC) to provide a validity check to the Part D RAC’s work, and per the report, anticipates awarding a Part C RAC contract in the “summer 2013.” CMS also issued a FAQ document and an informational bulletin in December of 2011 regarding the latter final Medicaid RAC rule.
Note that on June 25, the Senate Finance Committee convened a hearing to discuss ways to improve the Medicare RAC program. To access witness testimony and opening statements, as well as an archived recording, see here.
On a related note, the HHS OIG on September 4, 2013 issued a new report examining the extent to which Medicare RACs identified improper payments and referred potential fraud to CMS, and CMS, in turn, took corrective action. Using FY 2010-11 data and RAC performance/evaluative assessments, the OIG determined that “RACs identified half of all claims [1.3 million of 2.6 million total claims] they reviewed as having resulted in improper payments totaling $1.3 billion.” The OIG concluded that though “CMS took corrective actions to address the majority of vulnerabilities” the RACs identified during this period, recovering $903 million from or returned to providers during the FY 2010-11 period, CMS “did not evaluate the effectiveness of these actions.”
On January 6, 2014, CMS issued a proposed rule delineating Contract Year 2015 MA and Part D policy and technical changes. The rule proposes, among other things, to limit and redefine, based on new criteria, Part D’s protected drug classes to initially include anticonvulsants, antiretrovirals and antineoplastics — but not antidepressants and immunosuppressants – as “drug categories and classes of clinical concern” for the 2015 coverage year. The rule addresses each of these provisions of the ACA in some manner. A CMS fact sheet is available.
On February 18, 2104, CMS posted updated guidance indicating that, in anticipation of the upcoming transition to the subsequent round of RAC contracts, it will implement a “pause in operations” to allow the current RACs to “complete all outstanding claim reviews and other processes by the end date of the current contracts.” In the course of this announcement, CMS also announced a new timetable.
On March 10, 2014, the Administration informed top Congressional leaders that it will not finalize some of the key changes to Part D that it had proposed in a draft regulation issued January 10. The elements of the Proposed Rule that the Administration will not finalize include: (1) Changes to the Six Protected Classes, which would have excluded mental health and immunosuppressive drugs from these protections (such as a requirement that plans cover all drugs in these classes), among other revisions; (2) Reductions in the number of plans a Part D sponsor may offer; (3) Limitations on the use of preferred pharmacies; and (4) New interpretation of the non-interference provisions. The Administration notes it will gather additional input and effectively reserves the right to advance changes in these areas in future years. But no changes will be made for the CY15 plan year. It will move forward with other elements of the Rule, as discussed in the Administration’s letter to Congressional members. A copy of the letter is available externally here.
On March 26, 2014, CMS transmitted the 2012 Medicare and Medicaid RAC report to the Congress pursuant to this section of the ACA. The report provides an overview of the effectiveness of the RAC program under Medicare and Medicaid, including efforts with respect to the ongoing expansion of and general improvements to the program.
On May 19, CMS issued a final rule on MA and Part D contract year 2015 technical changes. While the final rule codifies a number of fraud and abuse-related proposals, as signaled in an earlier letter to Congress the final rule does not adopt controversial proposed modifications to Part D protected drug classes or limitations on offering more than two Part D plans in a given region. The rule addresses each of these provisions of the ACA in some manner. A fact sheet is available here.
In early May 2014, CMS transmitted the FY 2012 Medicare and Medicaid RAC report to Congress (available here). The report, which is submitted in accordance with the ACA mandate that is delineated at section 6411(c), is intended to provide an overview of the effectiveness of the RAC program under Medicare and Medicaid, including efforts with respect to the ongoing expansion of and general improvements to the program.
On a related note, in early June 2014, CMS provided an update on its ongoing Medicare RAC program efforts, announcing the establishment of a Provider Relations Coordinator under the RAC program “to improve communication between providers and CMS.”
On August 5, CMS announced here that, “[d]ue to the continued delay in awarding new Recovery Auditor contracts,” the agency “is initiating contract modifications to the current Recovery Auditor contracts to allow the Recovery Auditors to restart some reviews.”With respect to the broader Recovery Audit program process, CMS notes that “[t]his limited Recovery Audit Program restart may continue until the new Recovery Auditor contracts are awarded with sufficient time for an orderly transition,” though notes that “[t]he restart will not include the Recovery Audit program improvements that are planned for the new contracts.”
On Aug. 27 and 28, CMS announced via updates to its site here that a “contract modification” that permitted current RACs to restart some reviews “has been completed” for Regions A, B, C, and D. CMS noted further that “[m]ost reviews will be done on an automated basis, but a limited number will be complex reviews of topics selected by CMS.”
In early November, CMS noted here that “[t]he new contracts for [RA] Regions 1, 2, and 4 remain under a pre-award protest, which is expected to continue into late summer of 2015.” Regarding Regions 3 (Part A/Part B claim reviews) and 5 (national contract for DMEPOS and Home Health and Hospice claim reviews), CMS notes that “the procurement process continues” and that it “remains hopeful that these two new contracts will be awarded before the end of this year.”
On Dec. 30, CMS issued a document enumerating changes to the RAC program to be effective with each new contract award beginning with the DME, Home Health and Hospice Recovery Audit contract award.
On Feb. 23, CMS issued an update regarding its administrative agreement offered to acute care hospitals and critical access hospitals to settle pending appeals of inpatient status denials.
On Apr. 16, the Medicare Access and CHIP Reauthorization Act of 2015 was signed into law (P.L. 114-10), which included a provision that extends the current RAC prohibition on inpatient hospital patient status reviews (‘two-midnight’ policy) and the parallel ‘Probe and Educate’ process through Sept. 30, 2015
On May 20, members of the U.S. Senate Special Committee on Aging called on the CMS during a hearing to make changes to Medicare’s recovery audit contractor program.
On June 3, the Senate Finance Committee approved the Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015, a bill intended to improve the Medicare audit and appeals process by addressing the large backlog of appeals.
On June 11, CMS announced that as of June 1 it had executed settlements with more than 1,900 hospitals, representing approximately 300,000 claims and “paid approximately $1.3 billion to providers.”
2016
On May 9, GAO released a report finding that CMS has not expanded the RAC program as it was required to do, leading to improper Medicare Advantage payment in some cases.
SEC. 6410. ADJUSTMENTS TO THE MEDICARE DURABLE MEDICAL EQUIPMENT, PROSTHETICS, ORTHOTICS, AND SUPPLIES COMPETITIVE ACQUISITION PROGRAM. (a) EXPANSION OF ROUND 2 OF THE DME COMPETITIVE BIDDING PROGRAM.—Section 1847(a)(1) of the Social Security Act (42 U.S.C. 1395w–3(a)(1)) is amended— (1) in subparagraph (B)(i)(II), by striking ‘‘70’’ and inserting ‘‘91’’; and (2) in subparagraph (D)(ii)— (A) in subclause (I), by striking ‘‘and’’ at the end; (B) by redesignating subclause (II) as subclause (III); and (C) by inserting after subclause (I) the following new subclause: ‘‘(II) the Secretary shall include the next 21 largest metropolitan statistical areas by total population (after those selected under subclause (I)) for such round; and’’. (b) REQUIREMENT TO EITHER COMPETITIVELY BID AREAS OR USE COMPETITIVE BID PRICES BY 2016.—Section 1834(a)(1)(F) of the Social Security Act (42 U.S.C. 1395m(a)(1)(F)) is amended— (1) in clause (i), by striking ‘‘and’’ at the end; (2) in clause (ii)— (A) by inserting ‘‘(and, in the case of covered items furnished on or after January 1, 2016, subject to clause (iii), shall)’’ after ‘‘may’’; and (B) by striking the period at the end and inserting ‘‘; and’’; and (3) by adding at the end the following new clause: ‘‘(iii) in the case of covered items furnished on or after January 1, 2016, the Secretary shall continue to make such adjustments described in clause (ii) as, under such competitive acquisition programs, additional covered items are phased in or information is updated as contracts under section 1847 are recompeted in accordance with section 1847(b)(3)(B).’’. with Federal and State law enforcement with respect to the Department of Justice, including the Federal Bureau of Investigations, the Inspector General of the Department of Health and Human Services, and the State medicaid fraud control unit; and’’. (2) COORDINATION; REGULATIONS.— (A) IN GENERAL.—The Secretary of Health and Human Services, acting through the Administrator of the Centers for Medicare & Medicaid Services, shall coordinate the expansion of the Recovery Audit Contractor program to Medicaid with States, particularly with respect to each State that enters into a contract with a recovery audit contractor for purposes of the State’s Medicaid program prior to December 31, 2010. (B) REGULATIONS.—The Secretary of Health and Human Services shall promulgate regulations to carry out this subsection and the amendments made by this subsection, including with respect to conditions of Federal financial participation, as specified by the Secretary. (b) EXPANSION TO MEDICARE PARTS C AND D.—Section 1893(h) of the Social Security Act (42 U.S.C. 1395ddd(h)) is amended— (1) in paragraph (1), in the matter preceding subparagraph (A), by striking ‘‘part A or B’’ and inserting ‘‘this title’’; (2) in paragraph (2), by striking ‘‘parts A and B’’ and inserting ‘‘this title’’; (3) in paragraph (3), by inserting ‘‘(not later than December 31, 2010, in the case of contracts relating to payments made under part C or D)’’ after ‘‘2010’’; (4) in paragraph (4), in the matter preceding subparagraph (A), by striking ‘‘part A or B’’ and inserting ‘‘this title’’; and (5) by adding at the end the following: ‘‘(9) SPECIAL RULES RELATING TO PARTS C AND D.—The Secretary shall enter into contracts under paragraph (1) to require recovery audit contractors to— ‘‘(A) ensure that each MA plan under part C has an anti-fraud plan in effect and to review the effectiveness of each such anti-fraud plan; ‘‘(B) ensure that each prescription drug plan under part D has an anti-fraud plan in effect and to review the effectiveness of each such anti-fraud plan; ‘‘(C) examine claims for reinsurance payments under section 1860D–15(b) to determine whether prescription drug plans submitting such claims incurred costs in excess of the allowable reinsurance costs permitted under paragraph (2) of that section; and ‘‘(D) review estimates submitted by prescription drug plans by private plans with respect to the enrollment of high cost beneficiaries (as defined by the Secretary) and to compare such estimates with the numbers of such beneficiaries actually enrolled by such plans.’’. (c) ANNUAL REPORT.—The Secretary of Health and Human Services, acting through the Administrator of the Centers for Medicare & Medicaid Services, shall submit an annual report to Congress concerning the effectiveness of the Recovery Audit Contractor program under Medicaid and Medicare and shall include such reports recommendations for expanding or improving the program.
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