The Department of Health and Human Services released its final rule for the Medicaid Recovery Audit Contractor program last month, and it is expected to save taxpayers roughly $2.1 billion over the next five years. This new Medicaid RAC program is based off the Medicare RAC program, which has already recovered roughly $670 million in overpayments so far in 2011.
The rule is effective Jan. 2012, but it's not yet certain how much Medicaid RACs will impact hospitals. While they are similar to Medicare RACs in principle, Medicaid RAC auditors will deal with more state-specific issues. Here, three healthcare professionals give their take on how the Medicaid RAC program will affect hospitals next year.
Jon Elion, MD, cardiologist at The Miriam Hospital in Providence, R.I., and founder and CEO of ChartWise Medical Systems: The General Accounting Office has estimated there are $32.7 billion per year in improper Medicaid payments — $18.6 billion of this represents the federal share, and $14.1 billion is the state share. This is an even larger amount than that associated with the Medicare program. This coupled with the fact there has not been meaningful financial return from the Medicaid integrity contractor audits means we can expect Medicaid RACs to be far more aggressive. There is likely to be a significant increase in overall enforcement of Medicaid fraud investigations.
Many aspects of Medicaid RACs will be influenced by variations in state law and details of each state's program. This makes it difficult to make broad generalizations about how to approach or plan for Medicaid RACs. Despite these uncertainties, hospitals can several steps to help reduce the impact of Medicaid RACs:
• Look carefully for categories of payments that may be considered as Medicaid overpayments, including payments made as a result of physician self-referral in violation of the Stark Law and payments for services induced by kickback (this has implications for drug and medical device company payments to physicians).
• Check the Office of Inspector General's list of excluded individuals and entities for new hires every six months to avoid the risk of receiving payment for services ordered or provided by an excluded provider.
• Establish a tracking system for requests. Familiarize yourself with state-established limits on the number and frequency of medical records to be reviewed. Look for review claims older than three years from the date of the claim or from claims that have already been audited or that are currently being audited by another entity.
• Put in place a comprehensive clinical documentation improvement program with the goal to assure complete and accurate clinical documentation.
Richard Gardner, partner, Arnall Golden Gregory: CMS' new final regulation on Medicaid RACs wraps yet another layer of administrative scrutiny around an industry already choking on bureaucratic oversight. Hospitals already find themselves in the crosshairs of an impressive variety of program audit efforts: Medicare administrative contractors, Medicare RACs, Medicaid integrity contractors, zone program integrity contractors, as well as existing state Medicaid program integrity audits. Next year, Medicaid RACs will join the fray, looking to identify and correct improper payments in exchange for a percentage of the savings. CMS has expressed confidence these various efforts are "complementary" as opposed to duplicative and can be coordinated to reduce the administrative burdens on providers. Some skepticism in that regard is probably warranted. The bottom line is there will be a new auditor at the hospital's door next year, requesting medical records for post-payment Medicaid claims review.
Hospitals need to be ready when they come calling and should already have systems in place to respond to audit requests and to streamline the appeals process. The new regulation requires Medicaid RACs to publish a list of issues to be reviewed, so hospitals need to be familiar with these issues — and the program in general — as soon as possible to ensure they are ready to respond.
One of the concerns is the new programs will be inherently inflexible. Under the current system, once a Medicaid overpayment is identified, the state has an obligation to repay the federal share back to CMS. This should incentivize a state to "get it right" and be more willing to listen to providers during administrative review. Medicaid RACs will be paid contingency fees out of the amounts they recover, which creates an incentive to err on the side of identifying overpayments. Once they do, the state has the same obligation to refund the federal share. Medicaid RACs are required to return their fees if an alleged overpayment is overturned at any level of the appeal proceedings, all of which means there will probably be every incentive to litigate and very little incentive to negotiate.
David Goldstein, president, Health Options Worldwide: Hospitals could potentially see a drastic increase in their administration costs as a result of Medicaid RACs, and it will ultimately have a huge impact on their daily activities. Cutting waste in Medicare and Medicaid over the next five years by a projected $2.1 billion would be a fantastic achievement in improving the efficiencies of our healthcare system, but the joy can be balanced by the increased administrative burden placed on healthcare professionals.
While the system was designed to identify underpayments and recoup overpayments, many hospitals believe the communication process has grown increasingly complicated when dealing with the remittance advice and attempting to reconcile payments. Furthermore, many hospitals note inconsistencies, including receiving demand letters after deadlines, repealing requests they've made for medical records after submission and 14-day turnaround times for responses.
Even considering all of these difficulties, the system will not be going away any time soon, so hospitals should devise policies to comply with these processes. While hospitals could benefit from the RACs, there will need to be additional changes implemented to improve the communication between the RACs and the hospitals.
HHS Releases Final Rule for Medicaid RAC Program
How to Navigate the RAC Appeals Process
The rule is effective Jan. 2012, but it's not yet certain how much Medicaid RACs will impact hospitals. While they are similar to Medicare RACs in principle, Medicaid RAC auditors will deal with more state-specific issues. Here, three healthcare professionals give their take on how the Medicaid RAC program will affect hospitals next year.
Jon Elion, MD, cardiologist at The Miriam Hospital in Providence, R.I., and founder and CEO of ChartWise Medical Systems: The General Accounting Office has estimated there are $32.7 billion per year in improper Medicaid payments — $18.6 billion of this represents the federal share, and $14.1 billion is the state share. This is an even larger amount than that associated with the Medicare program. This coupled with the fact there has not been meaningful financial return from the Medicaid integrity contractor audits means we can expect Medicaid RACs to be far more aggressive. There is likely to be a significant increase in overall enforcement of Medicaid fraud investigations.
Many aspects of Medicaid RACs will be influenced by variations in state law and details of each state's program. This makes it difficult to make broad generalizations about how to approach or plan for Medicaid RACs. Despite these uncertainties, hospitals can several steps to help reduce the impact of Medicaid RACs:
• Look carefully for categories of payments that may be considered as Medicaid overpayments, including payments made as a result of physician self-referral in violation of the Stark Law and payments for services induced by kickback (this has implications for drug and medical device company payments to physicians).
• Check the Office of Inspector General's list of excluded individuals and entities for new hires every six months to avoid the risk of receiving payment for services ordered or provided by an excluded provider.
• Establish a tracking system for requests. Familiarize yourself with state-established limits on the number and frequency of medical records to be reviewed. Look for review claims older than three years from the date of the claim or from claims that have already been audited or that are currently being audited by another entity.
• Put in place a comprehensive clinical documentation improvement program with the goal to assure complete and accurate clinical documentation.
Richard Gardner, partner, Arnall Golden Gregory: CMS' new final regulation on Medicaid RACs wraps yet another layer of administrative scrutiny around an industry already choking on bureaucratic oversight. Hospitals already find themselves in the crosshairs of an impressive variety of program audit efforts: Medicare administrative contractors, Medicare RACs, Medicaid integrity contractors, zone program integrity contractors, as well as existing state Medicaid program integrity audits. Next year, Medicaid RACs will join the fray, looking to identify and correct improper payments in exchange for a percentage of the savings. CMS has expressed confidence these various efforts are "complementary" as opposed to duplicative and can be coordinated to reduce the administrative burdens on providers. Some skepticism in that regard is probably warranted. The bottom line is there will be a new auditor at the hospital's door next year, requesting medical records for post-payment Medicaid claims review.
Hospitals need to be ready when they come calling and should already have systems in place to respond to audit requests and to streamline the appeals process. The new regulation requires Medicaid RACs to publish a list of issues to be reviewed, so hospitals need to be familiar with these issues — and the program in general — as soon as possible to ensure they are ready to respond.
One of the concerns is the new programs will be inherently inflexible. Under the current system, once a Medicaid overpayment is identified, the state has an obligation to repay the federal share back to CMS. This should incentivize a state to "get it right" and be more willing to listen to providers during administrative review. Medicaid RACs will be paid contingency fees out of the amounts they recover, which creates an incentive to err on the side of identifying overpayments. Once they do, the state has the same obligation to refund the federal share. Medicaid RACs are required to return their fees if an alleged overpayment is overturned at any level of the appeal proceedings, all of which means there will probably be every incentive to litigate and very little incentive to negotiate.
David Goldstein, president, Health Options Worldwide: Hospitals could potentially see a drastic increase in their administration costs as a result of Medicaid RACs, and it will ultimately have a huge impact on their daily activities. Cutting waste in Medicare and Medicaid over the next five years by a projected $2.1 billion would be a fantastic achievement in improving the efficiencies of our healthcare system, but the joy can be balanced by the increased administrative burden placed on healthcare professionals.
While the system was designed to identify underpayments and recoup overpayments, many hospitals believe the communication process has grown increasingly complicated when dealing with the remittance advice and attempting to reconcile payments. Furthermore, many hospitals note inconsistencies, including receiving demand letters after deadlines, repealing requests they've made for medical records after submission and 14-day turnaround times for responses.
Even considering all of these difficulties, the system will not be going away any time soon, so hospitals should devise policies to comply with these processes. While hospitals could benefit from the RACs, there will need to be additional changes implemented to improve the communication between the RACs and the hospitals.
Related Articles on RACs:
CMS: Medicare RACs Identify $75M in Overpayments in FY 2010HHS Releases Final Rule for Medicaid RAC Program
How to Navigate the RAC Appeals Process