The four private companies that run Medicare's recovery audit program will have their contracts extended through 2015. But it's unclear what types of medical reviews or claims are going to be eligible for auditing.
CGI Federal, Connolly, HealthDataInsights and Performant Recovery will be able to audit hospitals, doctors and other providers for improper Medicare payments through Dec. 31, 2015, the CMS said in its contract award notice. Also, the recovery audit contractors, or RACs, will be allowed to perform administrative and transitional activities through April 30, 2017. That year-and-a-half period allows them to review any last-minute claims and manage the appeals process.
The stock of HMS Holdings Corp., the parent of HealthDataInsights, began creeping upward once the CMS signed off on the measure, since the RAC contract represents a large chunk of HMS' business. The news has sent HMS stock up almost 9.5% since Dec. 22 to $21.57 as of last Wednesday morning. CGI's stock rose a more modest 1.3%. Connolly and Performant are privately held.
Medicare's RAC program has been in flux since last year. Contracts with the current vendors were set to expire this past February but were extended to June. The CMS then allowed RACs in August to conduct a limited number of automated reviews and some complex reviews related to spinal fusions, durable medical equipment and other non-inpatient procedures. During that time, CGI protested the government's new RAC contract terms and filed suit in federal court, which has created delays.
RACs are still barred from auditing short-stay inpatient admissions until March 31, 2015. Legislation passed in March held back the implementation of those audits under the two-midnight rule, which aims to classify more inpatient admissions as observation or outpatient stays.