Providers Should Prepare for RACs Expanding Into Medicaid

As part of the healthcare reform package approved last month, federal government agencies must expand the current recovery audit contractor program to Medicaid and Medicare Parts C and D no later than December 31, 2010.

One initial reaction of this announcement might have someone asking "Isn't that what Medicaid Integrity Contractors (MIC) are for?" Unlike RACs, MICs, which are part of the Medicaid integrity program, do not receive any portion of recoupment funds.

"It is unlikely that this will give providers any relief from the perceived inaccurate payments by the Part C plans as this does not appear to address those payments," says Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc. "The Part C RAC provisions appear to focus on CMS payments to Part C RAC contractors rather then their payments to providers."

On the Medicaid side, this will be difficult because instead of four main RACs, there could be 50 different Medicaid RACs, though it remains to be seen how this will be implemented. Perhaps there will be some aggregation of the states, but unlike Medicare, it will be difficult because each state has different Medicaid provisions.

During the RAC demonstration project, which only operated in New York, Massachusetts, Florida, South Carolina, and California, RACs successfully corrected more than $1 billion in overpayments from providers and underpayments refunded to providers. Experts say those figures will surely rise with the implementation of the permanent RAC program and expansion into Medicaid and Medicare Parts C and D.