Medicine Makes Feds Delay Medicaid RACs

Concerns by TMA and 80 other state and national medical societies have helped convince the Centers for Medicare & Medicaid Services (CMS) to delay a requirement that state Medicaid directors implement the Medicaid Recovery Audit Contractor (RAC) program by April 1. CMS now says it will come up with a new implementation deadline when it issues final rules later this year.

The Medicaid RAC program is part of the health system reform bill Congress passed last year and is intended to reduce fraud and waste. It is an expansion of the current Medicare RAC program.

In January, TMA, the American Medical Association, and other medical societies expressed their worry about the Medicaid program in a letter to CMS Administrator Donald Berwick, MD. The letter cited numerous problems with the Medicare RAC program, including administrative burdens, poor education of physicians about what would trigger an audit, and an inadequate appeals process.

"We continue to have concerns about the perverse incentive structure and burdensome nature of the Medicare Recovery Audit Contractor (RAC) program, and firmly believe that the best way to reduce improper coding is through education and outreach," the letter [PDF] said. "In regard to the Medicaid RAC program, while we support CMS's efforts to identify improper or fraudulent activity in the Medicaid program, we are concerned that the proposed rule does not provide sufficient guidance to States in establishing and implementing their Medicaid RAC programs. We urge CMS to review the improvements already instituted in the Medicare RAC program, and to require that similar safeguards are put in place for the Medicaid RAC program. We ask CMS to be mindful of the multitude of new challenges facing physicians as a result of health system reform, in addition to the implementation of health information technology and the transition to ICD-10-CM and ICD-10-PCS codes, and request that CMS set forth streamlined and straightforward requirements for the Medicaid RAC program to ensure efficient and high quality care delivery."

In another RAC-related development, CMS has set the number of medical records [PDF] that a RAC can request from a physician. This means RACs can begin doing complex reviews – the type that require medical records of physicians' claims.

Action, Feb. 15, 2011