CMS Rule Sets Stage for Medicaid Recovery Audit Contractors

The Centers for Medicare & Medicaid Services (CMS) proposed a rule last week to help states reduce improper payments for Medicaid healthcare claims through the implementation of Medicaid Recovery Audit Contractors (RACs).

Medicaid RACs are contractors, working for states, which will audit payments made to healthcare providers to identify those that may have been underpaid or overpaid, and will recover overpayments or correct underpayments, similar to the RAC program in Medicare.

“We are using many of the lessons that we learned from the Medicare RAC program in the development and implementation of the Medicaid RACs, including a far-reaching education effort for healthcare providers and state managers,” said CMS Administrator Donald Berwick, M.D., in a release.

Under healthcare reform, states must establish Medicaid RAC programs by submitting state plan amendments to CMS by December 31, 2010. The law allows CMS to provide extensions or exceptions to states, if necessary, and details regarding these processes are included in the proposed rule. The proposed rule also outlines the requirements that states must meet and the federal contribution CMS will provide to assist in funding the state RAC programs.

Medicaid RACs will be paid by the states on a contingency basis to review Medicaid provider claims. The proposed rule allows states the discretion to determine whether to pay their Medicaid RACs on a contingency basis or under some other fee structure for identifying underpayments.

Because CMS has proposed to require States to implement their programs in a timely manner, CMS is providing educational programs to help states understand both the Medicare and Medicaid RAC programs.

Read more

Full text of proposed Medicaid RAC rule in the Federal Register (PDF format)

Providers Prep for Medicaid RAC Proposed Rule

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