August 7, 2012

Medicaid RACs: Speed Bumps Along the Way

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It comes as something of a surprise to the provider community that the Medicaid RAC process finds itself considerably behind CMS’ planned implementation date of Jan. 1, 2012. Despite the three-month delay granted by CMS in the Medicaid RAC Final Rule from September 2011, many states find themselves still embroiled in the process of gathering proposals and selecting contractors for recovery audits.

To date, 21 states have signed a contract with a Medicaid RAC contractor. These states are: Alabama, Arizona, Colorado, Connecticut, Georgia, Indiana, Kansas, Maine, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina, and Tennessee. A review of the Medicaid sites for these states shows that their RAC programs are at varying levels of readiness for the commencement of actual audits.

Of note is that HMS, the auditing entity that purchased Medicare Region D RAC contractor HDI late in 2011, has been contracted to perform some type of RAC work in 15 of the above states. Add to that the fact that two additional pending state contracts are leaning in their direction, and it is safe to say that HMS has become the major player in Medicaid RAC contracting.

Quick math shows that 27 states have yet to sign a contract and assign RAC work to a contractor. In viewing where these states are in the contracting process, it appears that many states are several months away from finalizing a contract. There are some states that appear to have given up on RAC audits as part of their program. For example, in Arkansas, a Request for Proposal (RFP) was issued in April 2011, with no response. As a result, Arkansas’ Medical Services Division has declined to enter into a RAC contract.

There are other states that find themselves in similar straits. California expanded its original deadline for proposals after initial apathy, along with Massachusetts and Washington. Oklahoma and Virginia also await a suitor for their RAC services.

Strangely, while Arkansas is not pursuing a contract, they are not among the nine states that have directly requested from CMS an exemption from the RAC audit scope. When the Final Rule was released, CMS made it very clear that it would be inclined to grant an exemption only in the most extreme of circumstances. The reasons for requested exemptions have not been made clear. In an odd turn of events, three of the states requesting exemptions, Arizona, Georgia, and Kansas, have also finalized recovery contracts, which on the surface appears to put these states in opposition to themselves.

The six states that have requested exemptions in absence of a contract are Alaska, Maryland, Minnesota, Montana, South Dakota, and Texas. Montana is an interesting state on this list, as the Big Sky State is attempting to combine its contract with Utah, Idaho, and Wyoming for one regional RAC contractor, but is requesting an exemption nonetheless. Another strange occurrence within this Gang of Four is the fact that Utah has entered into a contract with HMS that is described as “RAC-like” by the two parties, which indicates that HMS had been conducting recovery audit work in the Beehive State prior to the passage of the Affordable Care Act. It isn’t known whether this gives HMS an advantage on any regional contract that may be signed.

To this point, providers have neither reported evidence of requests for documentation nor stated that an automated request for repayment has been received from either a RAC contractor or state Medicaid agency. The very idea of the latter raises questions as to who will handle this correspondence, given the changes that were recently made with the Medicare RAC program that transferred this responsibility from the RACs to the MACs. This specific process appears to have been left up to the states in the Final Rule.

As we travail through all of the ins and outs of contracting, the main idea that comes through is that Medicaid RAC audits are currently on hold. As a community, we should not eagerly await Medicaid RAC audits, but the lack of finalized contracts in many states gives providers a brief opportunity to prepare for what is yet to come.

About the Author

J. Paul Spencer is the compliance officer for Fi-Med Management Inc., a national physician practice financial management company based in Wauwatosa, Wis. Paul has more than 20 years of experience across all facets of healthcare billing, including six years spent with insurance carriers. In his current role with Fi-Med he acts as a physician educator on issues related to E/M level of service and documentation audits by CMS and other outside entities. Paul has carried the CPC and CPC-H credentials from the American Academy of Professional Coders since 1998.

Contact the Author

pspencer@fimed.com

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CMS: Audits of Medicare Advantage Could Reduce Overpayments by $370 Million

J. Paul Spencer, CPC, COC

J. Paul Spencer is a senior healthcare consultant for DoctorsManagement. Is the national correspondent for Monitor Mondays, the live Internet radio broadcast produced by RACmonitor.

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