Va. names HMS as Medicaid RAC

Virginia selected a recovery audit contractor with experience in the newly authorized fraud detection and prevention program for Medicaid.

The state awarded a three-year Medicaid RAC contract to HMS, the New York-based wholly owned subsidiary of HMS Holdings Corp. The contract has three one-year renewal options, according to an HMS news release.

The company will audit in-state and out-of-state providers participating in the Virginia Medicaid program to identify underpayments and overpayments for the Medicaid and Children's Health Insurance programs. Payments to the RAC will consist of "contingency fees"—a percentage of the overpayments or underpayments it identifies through its review of post-payment claims.

The Patient Protection and Affordable Care Act required each state to establish by Dec. 31, 2010, a Medicaid RAC program that contracted with at least one audit firm, according to the final rule implementing the provision (PDF).

The company already has RAC agreements with Medicaid programs in 24 other states, a spokeswoman said.

The company's previous "cost containment services" for Virginia public health programs have recovered $246 million since 1987, according to HMS. Nationally, HMS has provided benefits coordination and program integrity services for more than 40 state healthcare programs and more than 135 Medicaid managed-care plans, according to the company.

Meanwhile, the Medicare version of the RAC program has drawn extensive criticism from hospital advocates. Among their complaints, critics contend that it undercuts medical judgment and resorts to overly punitive corrective actions. Some providers have warned that similar problems could occur in the Medicaid version of the program.