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Contingency fees announced

The RAC Report, October 16, 2008

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CMS announced the new Medicare Recovery Audit Contractors (RACs) for its permanent nationwide program last week. Later in the week, they announced how much money they will make from provider overpayments.

The RACs get paid “contingency fees” based on the amount of the improper payments they correct for both overpayments and underpayments.

“Each RAC's contingency fee is established during contract negotiations with CMS and, as such, the contingency fee varies for each RAC,” CMS said.

The contingency fees breakdown as follows:

• Region A: 12.45%
• Region B: 12.50%
• Region C: 9%
• Region D: 9.49%

The four contractors and their selected regions are:

• Diversified Collection Services, Inc. of Livermore, CA: Region A, initially working in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and New York.
• CGI Technologies and Solutions, Inc. of Fairfax, VA: Region B, initially working in Michigan, Indiana and Minnesota.
• Connolly Consulting Associates, Inc. of Wilton, CT: Region C, initially working in South Carolina, Florida, Colorado and New Mexico.
• HealthDataInsights (HDI), Inc. of Las Vegas, NV: Region D, initially working in Montana, Wyoming, North Dakota, South Dakota, Utah and Arizona.

Connolly and HDI worked on the initial RAC demonstration project that spanned over six states, collected more than $900 million in overpayments, and returned nearly $38 million in underpayments to healthcare providers, according to a CMS press release.

For a further breakdown of the contingency fees and to learn the addresses of the four contractors, click here.

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