HHS Implements RAC Audits for Medicaid

October 7, 2011 – On September 14, HHS (Dept. of Health & Human Services) issued a final rule to establish a Medicaid Recovery Audit Contractor Program that will go into effect as of January 2, 2012. The Medicaid RAC program, which will be modeled after the Medicare RAC program, was mandated by the Affordable Care Act to identify underpayments and overpayments and to recover overpayments to Medicaid providers on a contingency basis. HHS expects this program to save $2.1 billion over the next 5 years of which $900 million will be returned to the states. 
 
The AMA states there have been many criticisms from the medical community accusing the Medicare RAC program of implementing aggressive auditing tactics and not educating providers better to avoid innocent coding mistakes that could result in practices coming under auditor scrutiny. CMS received 78 comments in response to their proposed rule from the medical community.  HHS listened and incorporated several of their concerns into this final rule.   

Some of the new provisions of the rule are:

States may: 

• Coordinate the recovery audit efforts of the RACs with other auditing entities,
• Set limits on the number and frequency of medical records to be reviewed by the RACS, subject to requests for exception from RACs to States, and
• States must notify providers of underpayments that are identified by the RACs and must adequately incentivize the detection of underpayments.

RACS must:

• Hire a minimum of one FTE Contract Medical Director who is a Doctor of Medicine and/or Osteopathy in good standing with the relevant State,
• Not review claims older than 3 years from the date of the claim, unless it receives approval from the State, and
• Not audit claims already under audit by another entity

We will keep you informed as we receive information from your State on how they will implement their RAC program.

Tags: RAC Audits