Medicaid RAC Rule Finalized

Section 6411 of the Patient Protection and Affordable Care Act (PPACA) expanded Federal efforts in the auditing and health care fraud arena by requiring that the Recovery Audit Contractor (RAC) program, which had previously only applied to Medicare, be applied to Medicaid as well. The Medicaid RAC programs will be operated by each individual State, but will be jointly funded by the State and the Federal government.
On September 16, 2001, the Centers for Medicare and Medicaid Services finalized the rule that will implement the health care fraud and abuse program. The Final Rule "provides guidance to States related to Federal/State funding of State start-up, operation and maintenance costs of Medicaid Recovery Audit Contractors (Medicaid RACs) and the payment methodology for State payments to Medicaid RACs." While the framework for the Medicaid RAC program was established in the corresponding proposed rule, the Final Rule sets forth the following important points:

· States may exclude Medicaid managed care claims from review by Medicaid RACs

· States must coordinate the recovery audit efforts of their Medicaid RACs with other auditing entities

· States must set limits on the number and frequency of medical records to be reviewed by the Medicaid RACs subject to requests for exceptions made by the RACs

· RACs must not review claims that are older than 3 years from the date of the claim, unless it receives approval from the State

· RACs should not audit claims that have already been audited or that are currently being audited by another entity

· If a provider appeals a Medicaid RAC overpayment determination and the determination is reversed, at any level, then the Medicaid RAC must return its contingency within a reasonable timeframe as prescribed by the State

· States must adequately incentivize the detection of underpayments and States must notify providers of underpayments that are identified by the Medicaid RACs

· States must provide appeal rights under State law or administrative procedures to Medicaid providers that seek review of an adverse Medicaid RAC determination

The Final Rule becomes effective on January 1, 2012.