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On December 30, 2014, the CMS announced that the National DMEPOS and Home Health & Hospice Recovery Audit contract had been awarded to Connolly, LLC. Connolly is no stranger to the RAC game, as they were previously the Region C Recovery Audit Contractor. Approved issues will be posted to the Connolly website as they were previously, and can be accessed through this link: http://www.connolly.com/healthcare/pages/ApprovedIssues.aspx. Along with the announcement that Connolly has been awarded the National DMEPOS and HHH contract comes the implementation of Improvements to the Recovery Audit Program, which were created in part, to reduce supplier burden and provide transparency to the program. Of note, the improvements include:

• Establishing ADR limits based on a supplier’s compliance with Medicare rules. Meaning, a supplier with low denial rates will have lower ADR limits while a supplier with high denial rates will have higher ADR limits.
• RACs must wait 30 days to allow for a discussion request before sending the claim to the DME MAC for adjustment. This allows time to initiate a discussion period and allow for possible changes to be made on the improper payment determination prior to the claim being sent to the DME MAC for adjustment. Suppliers will no longer have to choose between a discussion or an appeal.
• RACs will not receive their contingency fees until the 2nd level of appeal has been exhausted. This ensures that the RAC is properly applying Medicare rules and regulations on the claims they audit.
• RACs must maintain an accuracy rate of 95% and an overturn rate of less than 10%. Failure to meet these requirements will result in decreased ADR limits or elimination of certain reviews until the problems are corrected.

  The RACs are now required to employ a Contractor Medical Director (CMD), which among other things, could indicate that they will now be participating at ALJ Hearings, much like the DME MAC CMDs do now. While this does not immediately translate into unfavorable outcomes, it does provide another barrier in conveying the need for the equipment/supplies that were previously denied. At this time, Connolly has not posted any new issues to their website and information is still forthcoming as to what we can expect in these improvements. What is certain is that a national RAC focusing solely on DMEPOS and HHH claims will mean an increase in RAC audits.