HHS Releases Final Rule for Medicaid Audit Program

The Department of Health & Human Services (HHS) has released its final rule for the Medicaid Recovery Audit Contractor Program, which was created as a result of the Affordable Care Act.

In a press release about the Medicaid program as well as other government “anti-waste” measures, the Centers for Medicare & Medicaid Services (CMS) said it expects the audit recovery program to “save $2.1 billion over the next five years, of which $900 million will be returned to the states.”

CMS states in the release that the new Medicaid program is based on Medicare’s Recovery Audit Contractor program, which CMS described as “successful.”

In a cabinet meeting last month about anti-waste measures, Vice President Biden said the Medicare audit program had recovered nearly $670 million this year, an increase of nearly 800 percent versus 2010’s figures.

“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,” said Biden. “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.”

Under the new Medicaid Recovery Audit Contractor program, each state will be required to contract with at least one recovery audit contractor, who will examine and oversee payments made to Medicaid providers.

The program defines recovery audit contractors (RACs) as “entities with which CMS contracts to identify underpayments and overpayments as well as recoup overpayments, until recently, limited to Medicare's fee-for-service program.”

A summary of the final rule as published Sept. 16 in the Federal Register “directs States to assure that adequate appeal processes are in place for providers to dispute adverse determinations made by Medicaid RACs.”

Providers have complained that Medicare RACs have been inconsistent in determining which claims needed to be reviewed. In response, CMS said it “directed Medicare RACs to consistently document their ‘good cause’ for reviewing a claim.”

Providers have also objected to the lack of physician guidance at the Medicare RACs, which led to claims being incorrectly denied.

CMS in response said it now requires each Medicare RAC “to hire a minimum of one full-time-equivalent physician medical director to oversee the medical record review process; assist nurses, therapists, and certified coders upon request; manage quality assurance procedures; and maintain relationships with provider associations.”

Providers continue, however, to object to RAC decisions they feel are inconsistent and seemingly arbitrary in nature. CMS pays the RACs for their work on a contingency rate of 9 to 12.5 percent.

States must implement their Medicaid Recovery Audit Contractor programs by Jan. 1, 2012.

About the Author

Laurie Watanabe is the editor of Mobility Management. She can be reached at lwatanabe@1105media.com.

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