The expansion of the Recovery Audit Contractor (“RAC”) program implemented by Medicare under Section 302 of the Tax Relief and Health Care Act of 2006 has been delayed due to a stay in the contract work caused by protests filed by two unsuccessful bidders with the GAO.  Under the provisions of the Competition and Contracting Act of 1984, the GAO has 100 days to reach a decision, which would be due in early February.  Until then, the work of the four existing RACs is on hold pending the outcomes of the protests and the findings of the GAO.

CMS has released final regulations, in conjunction with its efforts to combat Medicare waste, fraud and abuse, which will require certain durable medical equipment (“DME”) suppliers to post a surety bond of at least $50,000.  The requirement, effective May 4, 2009 for new DME supplier enrollees and October 2, 2009 for existing ones, is due in part to the large number of improper and potentially fraudulent Medicare payments to this sector.  In addition, CMS indicated it has revoked billing privileges for more than 1,200 medical suppliers in Southern California and South Florida, and has suspended payments to a number of HHAs in the Miami-Dade, Florida area.  CMS is also implementing intensive claim review processes to better identify improper reimbursements to DME, HHA, physician and other providers.

Five Medicare contractors have been selected, bringing the total to 15, as announced by CMS in early January.  The final five contractors will process and pay Medicare claims for health care services under the Medicare fee-for-service program in 14 states, mostly in the South and Midwest.  The new contracts are expected to be in effect for up to five years, and will process and pay 36% of the national volume of Medicare Part A and Part B claims.  Under the current system, fiscal intermediaries process claims for Part A providers, such as hospitals, SNFs, HHAs and other institutional providers.  Carriers take care of the Part B claims for physicians, lab, outpatient and clinical services.  The new system consolidates those contractors, making it simpler for practitioners and providers to have a single point of contact with Medicare.  The 15 contracting agencies are referred to as Medicare Administrative Contractors or “MACs”

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