North Carolina Providers

HMS ( is under contract with the State of North Carolina Division of Medical Assistance (DMA) as North Carolina’s Medicaid Recovery Audit II Contractor (RAC II), pursuant to Section 6411 of the Patient Protection and Affordable Care Act of 2010. Accordingly, HMS is authorized to audit provider payments and associated financial records for Fee-For-Service claims to identify underpayments and overpayments, and to recover any overpayments made to providers.

HMS has identified the following targets to date:

Complex Review Targets

Inpatient DRG claims

  • Inappropriate Setting: Selected claims for procedures which have significantly higher denial rates due to short lengths of stay where care would have been appropriately provided in an outpatient setting; these may include claims for acute rehab stays, and for procedures that could have been provided in an outpatient setting.

  • Readmissions: Claims for two stays within a short time period, where the second stay may be unnecessary.

  • Significantly Short Length of Stay: Claims with a significantly short length of stay based on DRG and/or primary diagnosis for treatment or procedures rendered.

  • Target DRGs: This target consists of several combinations of DRGs and diagnosis codes which are often up-coded by hospital providers.

  • Transfer Billing Target: Claims that are billed as transfers with either the admit source or the patient disposition coded incorrectly.

Automated Review Targets

None at this time

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