RAC Expands to Medicaid: What Providers Can Expect
By: Justin Vaughn, M.Div, CPC
Director of Compliance

1/20/2012

Most of you have heard quite a bit about the “RACs”—recovery audit contractors.  These are independent entities that have been empowered by the federal government to review provider claims in an effort to identify over- and underpayments in connection with Medicare cases. 

Pursuant to federal statute and regulatory rule (“final rule,” as found in 42 CFR 455), the RAC program is now being expanded to Medicaid cases.  With that in mind, we would like to provide you with a brief overview of how the Medicaid RAC program will work:
Unlike the Medicare RAC program which relies on 4 regional RACs, each state will select its own auditing entity or entities, and must have done so by Jan 1, 2012, via signed agreement.

• The states will have great flexibility in determining how their RAC program will work, including the number and frequency of records to be reviewed, and the development of an appeals process.

• Unlike Medicare RACs which must publish the types of errors and claims they intend to target, the Medicaid RACs are not similarly bound by federal law.

• Medicaid RACs may only go back 3 years in their claims review, unless the state grants permission for an expanded look-back period.

• Medicaid RACs are not required by the final rule to review CHIPs or Medicaid managed care claims, though they are not expressly precluded from doing so.

• The final rule mandates that a Medicaid RAC must coordinate with other federal or state agencies/contractors (eg, Medicare RAC, CERT, Medicaid Integrity Contractor) to ensure providers do not undergo simultaneous reviews from varying auditing entities.

• Like the Medicare RACs, Medicaid RACs are required by law to refer providers suspected of fraud to the proper authorities.

As you can see, there is a great deal of uncertainty in the Medicaid RAC program since each state is given great leeway in developing its own plan and particulars.  To keep abreast of the RAC rules taking shape in your state, please be sure to visit your state’s Medicaid website.

The information presented herein reflects general information that is current as of the date it was first published.  In light of changes that may occur in the health care regulatory and compliance environments, the author's presentation of this information might become outdated.  Please check with your individual legal and/or compliance advisor(s) prior to taking any significant actions based upon the information and advice presented.