CMS Issues Guidance on Expansion of RAC Program to Medicaid - October 12, 2010

On October 1, the Centers for Medicare & Medicaid Services (CMS) issued a State Medicaid Director letter with guidance on provisions in the Affordable Care Act to expand the Recovery Audit Contractor (RAC) Program to Medicaid providers. The letter notes that States must apply for a State Plan Amendment either to affirm that they will establish a Medicaid RAC or that they will seek an exemption from participating. States may request that CMS waive certain Medicaid RAC requirements, but CMS has noted that it will only rarely permit States to be completely exempt from participation in the program. The letter also notes that CMS will not set contingency fee rates between RACs and States, but it will require States to report such rates and other RAC contract metrics to the Secretary of CMS. In addition, States will not have to establish new administrative review infrastructure to conduct Medicaid RAC appeals if their existing Medicaid provider appeal process is adequate. Finally, CMS noted that RACs must agree to timely report indications of potential health care fraud or abuse to appropriate authorities.