CMS Preps for Medicaid RACs

James Carroll, September 24, 2010

In a sign that may be viewed as the first step toward Medicaid Recovery Audit Contractors implementation, the Centers for Medicare & Medicaid Services released September 10 an information collection form and supporting documents for contractors for Medicaid plans. The release of formalized information comes as no surprise, according to Elizabeth Lamkin, MHA, president of Dalzell Consulting Group, Inc., in Hilton Head, SC.

"As we learned from the Medicare RAC demonstration project, the RACs collected $1.3 billion at a cost of 20 cents on the dollar," she says. "There is a huge incentive to expand the RAC program to Medicaid."

The documents within draft form CMS-10343 would be used by state Medicaid plans to attest that they've contracted with a contingency fee auditor. The forms list several criteria for the RAC expansion, including provisions related to payment of the Medicaid RACs, appeal of adverse Medicaid RAC determinations, and coordination of Medicaid RAC activity with other reviewers and entities (e.g., the Medicaid integrity program).

According to the CMS release in the Federal Register, the forms are intended for the preparation of the RAC expansion into Medicaid, as required by the Patient Protection and Affordable Care Act:

Under section 1902(a)(42)(B)(i) of the Social Security Act, States are required to establish programs to contract with one or more Medicaid RACs for the purpose of identifying underpayments and recouping overpayments under the State plan and any waiver of the State plan with respect to all services for which payment is made to any entity under such plan or waiver. Further, the statute requires States to establish programs to contract with Medicaid RACs in a manner consistent with State law, and generally in the same manner as the Secretary contracts with Medicare RACs.

State programs contracted with Medicaid RACs are not required to be fully operational until after December 31, 2010. States may submit, to CMS, a State Plan Amendment (SPA) attesting that they will establish a Medicaid RAC program. States have broad discretion regarding the Medicaid RAC program design and the number of entities with which they elect to contract.

Because the administration of Medicaid is up to individual states, the expansion of RACs into Medicaid may in fact prove difficult, according to Lamkin.

"We do not know how the RAC contractors will interpret state rules or work with providers," she says. "We may see problems much as we did in the Medicare demonstration project based on a learning curve for providers and RAC auditors."

Providers should begin to prepare for Medicaid RACs by first educating themselves on state Medicaid rules and begin to conduct audits on high-volume Medicaid procedures to determine if bills meet criteria. In the Medicare RAC demonstration project, coding and medically unnecessary services or settings were the cause of the majority of overpayments, which providers need to learn from, according to Lamkin.

"Make this part of your RAC committee work and treat it like the Medicare RAC preparation," she says. "Get it right on the front end with documentation and systems to prevent errors, and appeal, appeal, appeal!

View the form and supporting documents by clicking here.

James Carroll James Carroll is associate editor for the HCPro Revenue Cycle Institute.
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