The Patient Protection and Affordable Care Act (health reform law) enacted earlier this year mandates the expansion of recovery audit contractor (RAC) audits beyond Medicare to Medicaid by the end of this year. While RACs are gung-ho to begin auditing, administrators at the Centers for Medicare & Medicaid Services (CMS) are voicing concerns whether coordinating with 50 state programs is manageable.

In an American Medical Association (AMA) American Medical News article, CMS officials told a Congressional panel expanding the three-year program on time will be a tall order. “We’re still in the planning stages,” Deborah Taylor, director and chief financial officer of CMS Office of Financial Management, said. “We’re looking a little harder at Medicaid [because] it’s going to be tougher for us.”

She told the committee that CMS is farther ahead in implementing RAC audits for the Medicare Part D prescription program for seniors.

Sen. Tom Carper (D-Del.) told Taylor to continue working with her colleagues to meet the deadline. “The program has been successful,” said Carper. “The sooner the full program is up and running, the sooner we can recover millions of dollars—probably billions of dollars—in additional overpayments and put them to more effective use.” The RAC program nabbed $54 million in its first year and $247 million in its second year for the Medicare trust fund, Carper noted.

Auditors, who are paid based on the dollar amount of any improper payments recovered, are anxious to begin. “This may sound self-serving, but we are ready to take on more work,” Lisa Im, CEO of Performant Financial Corp., a former RAC demonstration contractor, told the Congressional panel. “This contract implementation is just the beginning but has great potential to succeed in returning dollars to CMS.”

8 Responses to “RAC Expands to Medicaid by Year-End”

1. Pamela Pully CPC, CPMA Says:
   August 4th, 2010 at 11:57 am

   I say about time. I bet they will find more waste in the Medicaid program then Medicare.

2. Carol Says:
   August 4th, 2010 at 1:11 pm

   The practices we work with are primarily in Illinois. Illinois Medicaid is terrible about publishing policies and updating provider manuals. In addition, they have codes that are required to be used that are not consistent with CPT guidelines or descriptions. Because we work very closely with our Medicaid provider rep (who is very helpful), we are able to obtain updated policy and payment information that is not published in the manuals to ensure our claims are billed and paid correctly. I am concerned about RAC’s having sufficient policy information to audit provider payments in the Medicaid program. Maybe they should begin with auditing the Medicaid programs to ensure they are HIPAA compliant with using standard codes, forms & formats, and timely and appropriately publishing coverage guidelines and payment policies so that providers can be held accountable according to published requirements.

3. JB Says:
   August 4th, 2010 at 1:55 pm

   If the government really wants to have some “meaningful” healthcare reform, they should start by requiring all Medicare and Medicaid programs use ICD and CPT coding. Better yet, all carriers should be required to adopt a national standard of diagnosis and procedure coding. As Carol noted in her post, Illinois’ Medicaid policies are not consistent with CPT guidelines or descriptions. This is also true in Pennsylvania and most other states.

4. Jackie, CPC, HIM Says:
   August 5th, 2010 at 10:09 am

   With Connecticut being a pre pay state for Medicare and Medicaid, this is how the nursing homes get paid. We are getting hit hard and it will only get worse. It’s a good thing, but management needs to be sure nursing and rehab are consistent in documentation, the appeal process creates so much additional work for everyone. i agree with the above responses, better healthcare, set standards in coding andf payment and policy for better billing. Years of waste in government, we are being punished now for it.

5. Marilyn, CPC Says:
   August 8th, 2010 at 8:59 am

   Does anyone know how the RAC auditors are being paid? I cannot help but wonder how much of the Medicare budget is allocated to these audits. We’ve seen several refund demands from this undertaking but all have one thing in common–patients discharged to SNFs following hip fractures. We billed Medicare for the follow-up films because we were unaware that a SNF was involved.

   With Medicare funding at current levels, we’ve closed our practice to new Medicare patients. Medicaid is only accepted as a secondary payer or if our surgeons happen to be on call at a hospital. I agree with the frustrations of understanding the Medicaid rules. In Oregon, we have a prioritized list. If the condition is above the funding level, it is covered. If below the line, it is not. So many patients are enrolled in managed care plans that require prior authorization that we lose money trying to follow the various rules.

   At what point will the government audit the fraudulent behavior of some of the patients covered under these programs?

6. Julie Says:
   August 12th, 2010 at 10:53 am

   Recovery Audit Contractors (RACs) are paid on a contingency fee basis, which provides and incentive for identifying and recovering improper payments.

   The increased focus on government programs (my perception) is due to the increased growth of Medicare and Medicaid. Historically, Medicare was established to provide health insurance for the elderly, meaning 65 and over. Of course life expectancy back then was 65 to 67, so it was never intended to care for the current population of chronically ill, medically fragile 80 year olds who illustrate today’s population.

   Medicaid also covers a lot of these seniors. Two thirds of all Medicaid spending is attributable to seniors and people with disabilities.

   Payment scrutiny is only going to get more exacting. Stay tuned…..

7. Amanda Says:
   August 20th, 2010 at 2:09 pm

   I too question how RAC is funded. And with the Medicaid audits, will they be GIVING us the money they owe us? In Texas, you can’t bill Medicaid unless you have the provider contract. We are set-up to accept them for secondary claims only and when Medicare doesn’t cross the claim over to Medicaid, they won’t reprocess the claim and we can’t bill Medicaid directly. So we are out tons of money for a crossover issue.

   I think they need to have “efficiency experts” come in and make them more uniformed and compliant with national guidelines (ICD and CPT and HCPCS) first and then start auditing. The only thing auditing a broken system does is slows the system, puts more workload on an already over-taxed group, and create mor confusion and trouble in the process.

8. debbiebarratti Says:
   December 8th, 2010 at 10:53 am

   this is the most cost consuming program I have ever seen. By the time you add the resources requried by the entire industry for monitoring, trending, screening, denying and appealing claims CMS could add billions to the overall health care system rather than looking at the dollars they saved. What is the ROI.

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