Providers Prep for Medicaid RAC Proposed Rule

The Centers for Medicare & Medicaid Services released the long-anticipated proposed rule for Medicaid recovery audit contractors (RACs) Friday, setting the stage for the targeted April 2011 implementation date.

The use of Medicaid RACs is another initiative put forth by CMS as part of the Affordable Care Act—implemented earlier this year—designed to identify waste, fraud and abuse in the healthcare system by reducing improper payments. According to the rule, states must establish Medicaid RAC programs by submitting state plan amendments to CMS by December 31, 2010 and fully implement their programs by April 1, 2011.

Providers now need to tighten up their processes for accurate coding and medical necessity as it relates to Medicaid as the latest RAC program begins to take shape.

"Hospitals need to be clear that the Medicaid RAC program does not replace current Medicaid auditing and program integrity efforts," says Joe Zebrowitz, MD, executive vice president for Executive Health Resources. "The additional Medicaid program oversight only makes more clear the need to have robust and compliant real-time processes on both the medical necessity and coding fronts, as well as a structured and scaled approach to defending oneself against inappropriate intermediary denials."

In addition to distinguishing the overall Medicaid RAC program from the Medicare RAC program, providers should take note that the appeals process will be vastly different as well. In the case of Medicare, the appeals process is laid out very clearly no matter what state you are in and you have the opportunity to present the case to an arbiter.

With the Medicaid RAC program, the states manage the appeals process, therefore, there will likely be greater variance between appeals processes, state-to-state, as compared to Medicare, according to Zebrowitz.