Judge blocks award of new RAC contracts

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Medicare's Recovery Audit Contractor program continues to struggle with controversy.

A federal judge has ruled that regulators may not award new RAC contracts until disputed terms of payment are resolved.

The RAC program was paused en masse in February because a backlog of claims had glutted the system.

Now, Judge Mary Ellen Coster Williams granted an injunction on Sept. 2, dictating that new RAC contracts cannot be awarded until a current RAC's legal challenge winds through the full legal process. This could take nine to 11 months, but the officials from complainant CGI Federal said they would request expedited consideration, according to court documents.

The Centers for Medicare & Medicaid Services had indicated that the awarding of new contracts would be one of the steps toward re-starting audits. Citing “continued delay in awarding new Recovery Auditor contracts,” CMS restarted some reviews in August.

CGI Federal, itself a current RAC, filed its complaint in federal court Aug. 27. 

It claimed that CMS would not be significantly harmed if it had to delay awarding new RAC contracts. To argue its case, CGI Federal used the agency's own words against it: Agency officials had said they could use a pause to “refine and improve” the program.

CGI's complaint is that it would take three to 10 times as long for auditors to receive payments under provisions of the current contract requisitions, according to its filing with the U.S. Court of Federal Claims. 

That court already has conceded that “[u]nder standard commercial practice in the recovery audit industry, a RAC invoices its commission payment immediately after the payer recoups the improperly paid claim,” CGI wrote. 

Federal contracts are supposed to reflect standard commercial practice, as part of the effort to encourage private companies to work with public entities.