BALTIMORE - The recovery audit contractor (RAC) program is on hold for now, but CMS has no plans to scrap it altogether.

During a Special Open Door Forum last week, CMS officials told 860 callers that it has put an "automatic stay" on the program due to protests filed by two unsuccessful bidders (the Government Accountability Office has until mid-February to make a ruling); however, the program is still on track to go nationwide by Jan. 1, 2010.

Industry stakeholders have voiced their own protests about the RAC program, mainly that by paying contingency fees, CMS encourages contractors to nitpick claims. But during the forum, CMS officials said contractors will be evaluated based on customer service, not collections.

"There is no quota per se that they have to meet in order to maintain their contracts," said CMS official Connie Leonard.

Additionally, officials said, if a provider appeals a finding and the RAC loses at any level of appeal, it must return the contingency fee.

Once the program starts up, each RAC will have a team of registered nurses, therapists, certified coders and a physician medical director charged with reviewing paid claims going back no earlier than Oct. 1, 2007. Examples of improper payment include medically unnecessary services, incorrect coding and duplicate claims.

The RACs will conduct two types of reviews: automated and complex. In a complex review, contractors will ask providers to submit copies of medical records and the contractors must review the records within 60 days. RACs must pay for inpatient hospital records, but they do not have to pay for other records. Failure to submit records within 45 days will result in an automatic denial.

Providers who receive demand letters from RACs have several options: allow recoupment, pay by check, file an appeal, or sign up for an extended payment plan, said CMS official Gia Lawrence.

If a provider disagrees with a finding, the RACs will offer a discussion period. For an automated review, that period begins with receipt of the demand letter, and for complex review it begins with receipt of a review results letter.

"During this period, you are able to provide additional information to the RAC to support your claim; however, the discussion period ends on the day of recoupment," said CMS official Ebony Brandon. "We suggest contacting the RAC as soon as possible."

A three-year trial of the RAC program ended in March. CMS gave the RACs $317 billion in paid claims data and the RACs found $1 billion in improper payments and repaid $37 million to providers.

In October, CMS awarded contracts to Diversified Collection Services in Livermore, Calif. (Jurisdiction A); CGI Technologies and Solutions in Fairfax, Va. (Jurisdiction B); Connolly Consulting Associates in Wilton, Conn. (Jurisdiction C); and HealthDataInsights in Las Vegas (Jurisdiction D).

For more information, go to www.cms.hhs.gov/rac.