Health Information Management

CMS releases Medicaid RACs final rule

HIM-HIPAA Insider, September 20, 2011

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In February, the Centers for Medicare and Medicaid Services (CMS) delayed its expected April 1 implementation of the Medicaid recovery audit contractors (RAC) final rule. CMS finally released that Medicaid RACs final rule September 14.

The new initiative, modeled after the Medicare RAC program, aims to fight waste and fraud in Medicaid and will save taxpayers an estimated $2.1 billion over the next five years, according to a press release from HHS. Approximately $900 million will be returned to states.
“Today we are building on an already successful program that targets improper payments in our healthcare programs and recovers those dollars, making Medicare and Medicaid more reliable and responsible,” HHS Secretary Kathleen Sebelius said in the press release. “We simply can’t afford to see even one penny of our healthcare dollars wasted and expanding this program will help us reach that goal.”
The rule itself implements section 6411 of the Affordable Care Act and provides guidance to individual states related to federal and state funding of state start-up, operation, and maintenance costs of Medicaid RACs. It also implements the payment methodology for state payments to Medicaid RACs, according to the rule.
In addition, the rule informs states that an adequate appeals process is in place for providers to dispute any adverse determinations made by the Medicaid RACs. It also directs states to coordinate with other contractors, entities auditing Medicaid providers, and with state and federal law enforcement agencies.
The rule outlines payment methodology determinations for states, as well as the timing of payments to Medicaid RACs. In the rule, CMS offers two options that illustrate ways that states can structure payments:
  • Option one: If state A paid RAC A its fee when the RAC identified an overpayment, and provider A appeals and prevails at any stage, RAC A must return the portion of the contingency fee that corresponded to the amount overturned.
  • Option two: If State B determined it would pay RAC B its contingency fee at the point at which the recovery amount is fully adjudicated, that is, at the conclusion of any and all appeals to available to provider B, then state B would pay RAC B a contingency fee based on the amount recovered.
The regulations outlined in the final rule are effective on January 1, 2012.
Editor’s note: For the latest RAC news and information, visit the Revenue Cycle Institute website.


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