The Centers for Medicare and Medicaid Services has issued a proposed rule for the Medicaid Recovery Audit Contractor (RAC) program with a targeted implementation date of April 1, 2011. The objectives of the Medicaid RAC program are to identify underpayments, overpayments and recover Medicaid overpayments in accordance with state laws and regulations. Taking into consideration lessons learned from the Medicare RAC Demonstration program, CMS cautions states in their design of Medicaid RAC programs.
The proposed Medicaid RAC program details how CMS will establish better guidance for organizations developing their Medicaid RAC programs. Proposed requirements of Medicaid RAC programs include the following:
States are required to report the effectiveness of Medicaid RAC programs to CMS; this will include, but is not limited to, recovery amounts, number of audits conducted, and potential fraudulent activity. Medicaid RACs will not replace current Medicaid integrity programs or audits. The proposed rule does not document a “look back” time period for a Medicaid RAC program. Payments to contractors will be issued on a contingent basis on overpayments recovered. States will be able to choose their method of paying Medicaid RACs for underpayments – either on a contingency basis or under some other fee structure agreed to by each party. Each individual state will be able to specify the contingency fee it will pay to contractors. States will be required to report and refund overpayments to CMS based on the net amount remaining after all fees are paid to the Medicaid RAC. Medicaid RACs will be required to employ trained nurses, therapists, certified coders and a physician Chief Medical Director to conduct the claims review. Evidence of fraud or criminal activity discovered by Medicaid RACs must be reported to appropriate law enforcement officials.
Currently, the Medicaid RAC program does not exclude medical necessity reviews. Healthcare providers and administrators should start now to work with their compliance, billing, case management and health information departments to ensure policies and procedures are in place to bill appropriately and receive accurate reimbursement for all services provided.
If you would like additional information on Medicaid RAC, please contact the experts listed below at (800) 270-9629.
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