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Medicaid RACs: CMS Delay Doesn’t Mean Stop
By Cheryl Servais, MPH, RHIA

Many in the compliance community breathed a sigh of relief on February 11 when the Centers for Medicare & Medicaid Services (CMS) issued a bulletin indicating that “states will not be required to implement their Recovery Audit Contractor (RAC) programs by the proposed implementation date of April 1, 2011.” The bulletin went on to explain that a new implementation deadline will be published with the final rule later this year.

While this news may give some providers a moment to catch their breath, it should not be interpreted as a signal to stop preparation for the program’s eventual implementation. Instead, savvy providers might take this extra time to review their Medicaid claims and the associated underlying records for any possible trouble spots that could fall prey to Medicaid RAC reviews when they do arrive.

Section 6411 of the Affordable Care Act provided for the expansion of the Medicare RAC program into the Medicaid program by requiring states to contract with one or more RACs to audit payments to Medicaid providers. Similar to the RAC program under Medicare, the Medicaid RACs will focus on identifying underpayments and overpayments and recouping overpayments for all services under the state plan.

States and territories were expected to submit a state plan amendment to the CMS by December 31, 2010. As of March 31, 2011, all states and territories had submitted a state plan amendment and all but three amendments (Louisiana, North Dakota, and the District of Columbia) had been approved by the CMS. The plan amendments indicate that the state will contract with a RAC or will seek an exemption. (Fifteen states and territories requested some type of exemption.)

The Medicaid RAC program will operate in addition to already-intensified state Medicaid Integrity Programs. These programs, comprised of contractors who review claims data, audit payments, and provide education to providers, have been operating since 2007. The Medicare Fraud Control Units and Zone Program Integrity Coordinators and other agencies will continue to operate each of their respective review programs.

Each state will write the rules for how the RAC(s) they have contracted with will conduct audits. Each state will also coordinate all review efforts in an attempt to avoid any duplication. However, entities that treat patients from multiple states may have a variety of audit rules and review contractors to contend with. Additionally, each state will have its own appeals process. At this point, there are few national standards or guidelines from the CMS on how Medicaid RACs should operate (ie, no restrictions on the number of records that can be requested and little CMS oversight on denial patterns). Both of these issues have been addressed in the permanent Medicare RAC program.

Adopt a Five-Point Plan

  1. Stay informed. Communicate with state Medicaid agencies, as not all of them will be delaying their processes and may start them shortly. The CMS delayed only the final date for all states to comply; it did not delay the start date for states that are ready to implement a Medicaid RAC program.

    Just as the Medicare RAC program changed as the CMS and RAC contractors gained experience with the auditing process, the state programs will evolve over the next several months. It is important to monitor state Medicaid sites as well as RAC sites. Communication to all staff must occur on a regular basis so your response program stays efficient and effective.
  2. Understand organizational impact. Determine whether existing staff will be able to handle the additional volume of requests, follow-up queries, and appeals. For many facilities, the amount of claims and requests for records and items to track may be different from the Medicare volumes. As a result, a different mix of staff may be required. At this point, there is no reimbursement for preparing record copies as exists with Medicare RACs—this cost must now be absorbed by the facility.

    Be sure there is someone within the organization who knows the state appeals process. Because states may set up a separate appeal process for the Medicaid RAC claims, be on the lookout for a different appeal procedure.
  3. Understand your rights. It is important to designate a staff member who will stay informed about the Medicaid RAC process; there are currently few guidelines from the CMS. In addition, each state will establish its own program for the review process as well as any discussion, rebuttal, and appeals process. If a provider is uninformed, it could miss critical requirements or deadlines. Know the state Medicaid program’s billing guidelines as well as the guidelines of other Medicaid state programs if the facility treats patients from those states. The Medicaid RACs may not understand all the various state regulations. Educating staff involved in the RAC review process is a key factor to a successful defense program.
  4. Review Medicaid claims, coding, and documentation. Set up a review program that uses the same diligence employed when auditing Medicare or Medicaid claims. Focus on billing and coding accuracy and documentation sufficiency to support items on the claim. Be sure billing requirements are met for all state Medicaid plans that provide reimbursement to the facility’s patient population.
  5. Establish processes for handling Medicaid RAC requests, findings, follow-up, and appeals. The Medicaid RAC process may be similar to the process used for Medicare, but it will not be the same. For example, Medicaid reviews will include far more obstetric and pediatric cases than Medicare, meaning different departments and experts may be needed, especially for responses or appeals. Be sure the Medicaid RAC and any state organizations are aware of your facility’s appropriate contacts so all letters and requests are sent to the correct individual. Be aware that the Medicaid RAC may be a different contractor from the Medicare RAC.

Cheryl Servais, MPH, RHIA, is corporate vice president of compliance and privacy officer for Precyse Solutions, LLC.