Healthcare Business News

HHS issues Medicaid RAC rule

By Jessica Zigmond
Posted: September 14, 2011 - 11:15 am ET

Building on the Medicare Recovery Audit Contractor program, HHS on Wednesday issued a final rule to establish a Medicaid Recovery Audit Contractor program (PDF) that the agency expects will save $2.1 billion in waste over the next five years.

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The rule was released on the same day Vice President Joe Biden convened a Cabinet meeting at the White House to discuss the Obama administration's Campaign to Cut Waste.

“Today's announcements on cutting waste in Medicare, Medicaid and Unemployment Insurance shows that we can make our government more efficient and responsible to the American people,” Biden said in a news release. “If we're going to spur jobs and economic growth and restore long-term fiscal solvency, we need to make sure hard-earned tax dollars don't go to waste.”

On a call with reporters, an HHS official noted that about $668 million has been recovered this year in the Medicare Recovery Audit Contractor program, and that the Patient Protection and Affordable Care Act included the anti-fraud provision of expanding the RAC program to Medicaid. Of the anticipated $2.1 billion in recovered funds, about $900 million is expected to be returned to the states, the official said. It's also expected that Medicaid RAC auditors would be paid about the same percentage—10% to 12%—of recovered funds as Medicare RAC contractors.

Effective Jan. 2, 2012, the rule gives guidance to states about federal and state funding for the start-up, operation, and maintenance costs of Medicaid RAC contractors and the payment methodology for state payments to Medicaid RACs. It also directs states to ensure that proper appeal processes are in place for providers to dispute “adverse determinations” from the contractors, according to the rule.

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