A couple of months ago I posted a thread warning about the Centers for Medicare and Medicaid Services (CMS) Recovery Audit Contract (RAC) Initiative and it's impact on Rehab providers. This is an update.

As previously stated, the RAC initiative was originally designed to identify billing errors (error rate estimated to be 5%-10%) and return the revenue back to CMS. CMS selected RAC contractors for each state and agreed to pay contractors 30% of all recovered revenue.

This initiative was not a major concern of rehab providers until two RAC contractors began to apply a very broad interpretation to the initiative. By broadly interpreting the term “medically necessary,” these RAC contractors are well on their way to closing down acute rehabilitation centers in California and New York. To date, we have heard that the Calif. auditor, PRG Shultz has requested take-backs nearing 100 million dollars. And now it's expanding.


CMS Announces Expansion to RAC Program

The Centers for Medicare & Medicaid Services (CMS) has announced that the Recovery Audit Contractor (RAC) program will be expanded effective July 1, 2007. Three states — Massachusetts, South Carolina and Arizona — will be added to the program. In addition, facilities served by Mutual of Omaha in all RAC review states will be included.


Medicare is scheduled to expand this to all 50 states begining on 1-1-08.
Some Rehab associations are predicting that as many as 50% of all inpateint rehab centers in the US could close their doors if RAC auditors continue their current practices.

It's coming to your state...and soon.