PRGX Global, the RAC contractor formerly known as PRG-Schultz, whose 2008 protest of the awarding of permanent RAC contracts caused a two-year delay of the nationwide RAC rollout, is pinning hopes on elevating its status from a subcontractor to a primary RAC contractor when the Centers for Medicare & Medicaid Services (CMS) announces the awarding of new contracts sometime this year.

In a 10-K filing dated March 13, PRGX Global wrote that while it serves as a subcontractor to three of the four permanent RACs (CGI Federal, Inc., Connolly Consulting, and Performant Recovery, formerly Diversified Collection Services, Inc.), it believes it is “well-positioned to compete in the bidding process.” In the filing, the contractor also acknowledged that “there are no assurances that we will receive any contract when the new Medicare RAC contracts are ultimately awarded.”

PRGX Global also explains in its filing that there’s reason to believe that “CMS will allow the current RAC contracts to expire in August 2013, subject to any extension.” PRGX Global would be affected if those contracts expire, the company notes.

“Should the prime contracts expire in August 2013, our RAC subcontracts will also expire at that time, subject to any additional extensions by CMS in connection with the transition to new RAC contracts,” the filing read. “And contracts for the performance of future Medicare RAC services will be subject to a bidding process administered by CMS.”

PRGX Global indicated that CMS had issued a request for proposals relative to rebidding, and that those proposals were due by March 27.

In response to written questions from RACmonitor, CMS confirmed that it did issue a request for quotes (RFQ) through the General Services Administration (GSA) to companies that “are on/have been approved” for the GSA schedule. CMS indicated that the quotes were due this week, and the agency said that based on the quotes received, it anticipates issuing five separate task orders.

PRGX Global: A Contractor with a History

CMS formally announced the national rollout of the RAC program on Oct. 6, 2008 by naming four permanent RACs and assigning each to one of four U.S. geographical regions. In its news release, the agency indicated that the new RACs were “selected under a full and open competition.” The formal rollout came on the heels of the CMS three-year RAC demonstration program in California, Florida, New York, Massachusetts, South Carolina, and Arizona, a test run conducted from 2005 through 2008.

PRG Shultz had been the RAC contractor in California during the demonstration. Having failed to make the cut to be a permanent RAC — the contract was awarded to HealthDataInsights — PRG Shultz and its subcontractor, Viant Health Payment Solutions of Naperville, Ill., lodged a complaint with the Government Accountability Office (GAO). On Election Day 2008, Nov. 4, CMS officially acknowledged the formal protest and the GAO initiated an automatic 100-day stay.

On Feb. 6, 2009, as first reported by RACmonitor, the GAO announced a resolution and settlement whereby both PRG-Shultz and Viant would be retained as subcontractors to each of the four permanent RACs. PRG-Shultz would serve as contractor to HDI, then-DCS, and CGI, while Viant would be the Connolly subcontractor.

Back in California

Not without controversy, PRG-Shultz was the subject of two amicus (friend of the court) briefs filed with the U.S. Court of Appeals for the Ninth District in August 2010 by the law firm of Hooper, Lundy & Bookman, P.C., (HLB). The first was filed on behalf of the Federation of American Hospitals (FAH), the American Hospital Association (AHA), and the American Health Care Association. A second brief was filed on behalf of the California Hospital Association. The briefs both were filed in appeal of a federal district court ruling involving Palomar Medical Center in Escondido, Calif., and the U.S. Department of Health and Human Services.

According to statements in the second brief, of 852 claims for inpatient rehabilitation services denied by PRG-Shultz, 794 were overturned at the administrative law judge (ALJ level), an HLB blog posting indicated.

“PRG’s review of IRF claims was so questionable that CMS mandated a pause pending a validation review,” the brief read. “An outside contractor reviewed a sample and determined that 40 percent of PRG’s denials were incorrect. CMS then required PRG to re-review the IRF claims it previously denied. PRG reversed 1,454 of its 5,237 denials.”


What’s Next?

How might providers be affected by the changing of the guard among recovery auditors in the coming months? It’s a topic addressed this week by healthcare attorney David Glaser.

“Even if there is a major change in the RAC contractors, it seems unlikely to result in many positive changes for providers,” Glaser said in a written statement to RACmonitor. “The desire to recoup money through audits means that providers are likely to face continued audits, and there is little reason to expect that new contractors will be any less bureaucratic and frustrating than past contractors have been.”

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Chuck Buck is publisher of RACmonitor.

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