HHS Issues Medicaid RAC Rule, Effective January 1, 2012

Building on its successful program that targets and recovers improper Medicare payments, on September 14, 2011, the Centers for Medicare & Medicaid Services issued a final rule to establish a Medicaid Recovery Audit Contractor (RAC) program. The Medicaid RAC program, part of the Patient Protection and Affordable Care Act which expanded the RAC program to include Medicaid, is designed to identify overpayments and underpayments within each state’s Medicaid program and to recover all overpayments. In addition to the Medicare RAC program, which has recovered approximately $668 million this year alone, CMS expects the Medicaid RAC program to save taxpayers an additional $2.1 billion over the next five years, of which $900 million will go back to the states.

Key provisions of the Medicaid RAC program’s final regulations include the following:

•  States are required to contract with one or more RACs, and all payments to RACs must be made from recovered funds.
• States must ensure that proper appeal processes are in place for providers to dispute “adverse determinations” from the contractors.
• States may exclude Medicaid managed care claims from review by Medicaid RACs.
• States must coordinate the recovery audit efforts of their Medicaid RACs with other auditing entities.
• States must set limits on the number and frequency of medical records to be reviewed by the Medicaid RACs subject to requests for exceptions made by the RACs.
• Medicaid RACs cannot review claims that are older than three (3) years from the date of the claim, unless it receives approval from the state.

The final rule was released on the same day Vice President Joe Biden convened a Cabinet meeting at the White House to discuss the Obama administration’s Campaign to Cut Waste, an agency-wide effort to reduce waste.

“Today’s announcements on cutting waste in Medicare, Medicaid and Unemployment Insurance shows that we can make our government more efficient and responsible to the American people,” Biden said in a news release. “If we’re going to spur jobs and economic growth and restore long-term fiscal solvency, we need to make sure hard-earned tax dollars don’t go to waste.”

According to the final rule, states must fully implement their Medicaid RAC programs by January 1, 2012. The final rule can be found at http://www.ofr.gov/OFRUpload/OFRData/2011-23695_PI.pdf

 Reprinted with permission.  All rights reserved.