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What Do Providers Need to Know About Medicaid RACs?

In 2005, the Centers for Medicare & Medicaid started the Medicare Recovery Audit Contractor (RAC) program in three pilot states, where the program recovered over $900 million dollars during the three-year pilot. Due to the success of the pilot program, CMS expanded the program to all states in 2010, and has since recovered over three billion dollars. The success of the Medicare RACs resulted in the expansion of the current RAC program to Medicaid and Medicare Parts C and D through Section 6411 of the Affordable Care Act (ACA).

The ACA requires states to:

  • Contract with a RAC to ensure that overpayments and underpayments by the state Medicaid agency are identified, and that overpayments are recouped;
  • Create an appeal process for entities to appeal adverse RAC determinations; and
  • Coordinate with other governmental entities performing audits to improve recovery efforts.

States were required to implement their Medicaid RAC programs by January 1, 2012. Importantly, the ACA requires states to contract with RACs, but states are free to contract with any RAC. As a result, there is significant variability between the states – there are 50 different sets of rules, and 50 different appeal processes. Furthermore, since legislation in each state regarding the Medicaid RAC rules is different, information on such processes may be difficult to find. In addition, since Medicaid is open to people of all ages, there will also be considerably more medical procedures for Medicaid RACs to audit. Finally, the look-back period also varies by state – although most states have a three year period, some states have five and six year periods.

In response to this Medicaid RAC variability, providers should understand where their Medicaid RAC is and stay alert to their approved issues and what they are focusing on. As always, providers should maintain excellent documentation regarding the physician’s rationale for the services provided and the rational for how the provider arrived at the billing status. If you or your healthcare entity need help understanding your state’s Medicaid RAC, or if you have been audited by a Medicaid RAC, please contact an experienced healthcare attorney at 248-544-0888.