Tips for Effectively Beginning a Medicaid RAC Program

Posted on: January 10th, 2013 by hmshealthcare

Section 6411 of the Affordable Care Act (ACA) requires states to partner with Medicaid Recovery Audit Contractors (RACs) to identify overpayments and underpayments by the state Medicaid agency; recoup overpayments; create processes for appealing adverse determinations; and coordinate recovery efforts with other entities.

As of November, 34 states have awarded Medicaid RAC contracts and 11 states have converted existing contracts. However, several of these states have been slow to start their Medicaid RAC initiatives for a variety of reasons. A number of states were waiting for the Supreme Court to rule on the ACA and/or on the outcome of the presidential election before moving forward with a robust Medicaid RAC implementation. Other states have been grappling with the technical considerations: for a Medicaid RAC program to be truly effective, vendors should be provided with very detailed paid claim data extracts. The additional programming and IT resources needed from both MMIS and Medicaid Data Warehouse vendors have been challenging for states to manage.

Unfortunately, postponing the Medicaid RAC implementation for any reason can have a negative impact on states and other Medicaid stakeholders, including:

  • Delayed recovery revenue for the Medicaid program
  • Lost recovery opportunities for claims that age out of the Medicaid RAC review period
  • Provider confusion when communicated timeframes for releasing scenarios and reviews are not met

Therefore, it is of the utmost importance that states begin their Medicaid RAC initiatives as quickly as possible. To get their Medicaid RAC programs up and running smoothly and effectively, states should consider these best practices:

  • Prepare as early in advance as possible for the data transfer needed to support the Medicaid RAC agenda.
  • Offer proactive, educational outreach to the provider community. Educational opportunities include identifying the Medicaid RAC contractor, communicating RAC review/audit procedures, and presenting guidelines for provider responses.
  • Ensure that responsibilities for claim selection, overpayment identification, provider outreach, and recovery are clearly defined among the state agency, MMIS vendor, and Medicaid RAC vendor(s) to avoid confusion and potential stakeholder abrasion.
  • Support program efficiency and transparency for providers by using a robust provider portal and enabling electronic transmission of medical records.

Additionally, if a growing portion of Medicaid spending is under the managed care umbrella in a state, encounter data can be incorporated into the Medicaid RAC scope in an effort to ensure that no improper payments are going undetected.

With these strategies in place, states should begin seeing recoveries within 6-12 months of starting their Medicaid RAC program, and achieve full recovery streams within 12-15 months.


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