Health Information Management

News: CMS releases Final Rule for Medicaid RACs

CDI Strategies, September 29, 2011

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On September 14, CMS released its Medicaid recovery audit contractor (RAC) final rule, which sets the requirements for the state-by-state programs.

The new initiative, modeled after the Medicare RAC program, aims to fight waste and fraud in Medicaid and is expected to save taxpayers an estimated $2.1 billion over the next five years, according to a press release from the Department of Health and Human Services (HHS). About $900 million is expected to be returned to states.
“…[W]e 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.”
An important difference between the existing Medicare RAC program and the Medicaid RAC program is that each Medicaid RAC is a state program, not a regional program, says Elizabeth Lamkin, MHA, partner with PACE Healthcare Consulting, LLC, in Hilton Head, SC.
“Each state has a choice between plans A or B, and can set its own documentation limits independently,” she says. “For providers who serve multiple states, this could be a logistical nightmare when it comes to understanding multiple state rules.”
Payment methodology determinations for states are outlined in the rule, as are the timing of payments to Medicaid RACs. In the rule, CMS also offers two options that illustrate ways that states can structure payments. The regulations are effective on January 1, 2012.

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