State Medicaid Agencies to Begin RAC Audits in 2011

For years, CMS has used Recovery Audit Contractors, better known as "RACs", to identify and recover provider overpayments and underpayments in the Medicare program. After passage of the Patient Protection and Affordable Care Act (PPACA), which includes many Medicaid changes, States are now getting into the game. Recently CMS published proposed rules implementing Section 6411(a) of the PPACA. This amendment requires State Medicaid programs to establish RAC audit programs by December 31, 2010. States need not have their RAC auditing programs up and running by this date. Instead, they have until mid-April, 2011 under the proposed rule.

RAC contractors receive between 9% and 12.5% of a contingency fee for all payments recovered for the government.

The proposed rule requires States to have an "adequate" appeals process whereby providers can contest a RAC's findings. While the rule recognizes that most states already have an appeals process in place for administrative decisions (such as licensing cases), for RAC appeals the State's proposed appeal process must be pre-approved by CMS.

If you have any question about the new Medicaid RAC program or about any other health care reform changes, please visit us at Health Reform Connect, or contact one of our health care reform lawyers, Mark Bina.