Paul Spencer, compliance officer for Fi-Med Management in Wauwatosa, Wis., offers seven points on the upcoming implementation of the Medicaid RAC program.
1. April 1 deadline may not be met. CMS recently issued proposed rules for Medicaid RACs, and the comment period for them lasts until Jan. 10, 2011. CMS rules say states will implement their RAC programs by April 1, 2011, but Mr. Spencer doubts that would happen. States would have just three months after the rules are finalized, at a time when many of them are undergoing political turnover. Multiple governorships and legislators shifted to Republicans in the midterm elections.
2. Implementation more likely in July. CMS and the states, however, won’t want to put off implementation much longer because RACs are expected to be an enormous source of income at a time when everyone is short on cash. Many states have huge deficits, and the Obama administration is depending on its share of Medicaid RAC proceeds to help fund healthcare reform. "They will assign a very high priority to this," Mr. Spencer says.
3. Goal is to recover $9 billion a year by 2012. The goal of the Medicaid RAC program is to cut overpayments in half by 2012. In 2009, CMS identified $18 billion in improper Medicaid payments, compared with $24 billion in Medicare. Medicaid RACs cannot charge more than a 12.5 percent contingency fee, the same ceiling Medicare RACs have. States that allow a higher rate will have to pay the excess on their own.
4. RACs haven't been chosen yet. Each state is supposed to have contracted with a RAC by Dec. 31, 10 days before the comment period for the proposed rules ends, but it is not clear what contractors will be chosen. Several states could designate the same Medicaid RAC or choose a Medicare RAC. However, Medicare RACs are very focused on implementing the Medicare program. "They've got their hands full," Mr. Spencer says.
5. Rules carried over from Medicare RACs. The proposed rules for Medicaid RACs are very similar to those for their Medicare counterparts. That means hospitals only need to expand their RAC response teams using basically the same strategies rather than reinvent the wheel. Mr. Spencer says Medicaid RACs may start with certain "low-hanging fruit" already well picked by Medicare RACs, such as challenging hospital admissions of cardiac patients.
6. Implementation might be confusing. Unlike in the Medicare RAC program, two other agencies in each state will be reviewing provider claims and asking for penalties, creating a scene much like the Keystone Cops, as Mr. Spencer sees it. RACs may trip over the investigation units of each state Medicaid program or CMS Medicaid Integrity Contractors, which review one-third of the Medicaid programs every year. Obviously, two agencies cannot demand payment for the same claim, so they will need to coordinate activities, but "I'm completely at a loss as to how they will do that," Mr. Spencer says. The proposed rules do not provide much guidance on this.
7. Appeal overpayment decisions. Like their Medicare counterparts, the Medicaid RACs that state chooses will likely be small companies with little experience in this work. They will have to build up operations very fast, which can lead to many mistakes. In the Medicare RAC the demonstration project, the appeals rate was 8.7 percent and 64 percent of those were successful. With that kind of odds, it makes sense to appeal, Mr. Spencer says.
Find out more about Fi-Med Management.
1. April 1 deadline may not be met. CMS recently issued proposed rules for Medicaid RACs, and the comment period for them lasts until Jan. 10, 2011. CMS rules say states will implement their RAC programs by April 1, 2011, but Mr. Spencer doubts that would happen. States would have just three months after the rules are finalized, at a time when many of them are undergoing political turnover. Multiple governorships and legislators shifted to Republicans in the midterm elections.
2. Implementation more likely in July. CMS and the states, however, won’t want to put off implementation much longer because RACs are expected to be an enormous source of income at a time when everyone is short on cash. Many states have huge deficits, and the Obama administration is depending on its share of Medicaid RAC proceeds to help fund healthcare reform. "They will assign a very high priority to this," Mr. Spencer says.
3. Goal is to recover $9 billion a year by 2012. The goal of the Medicaid RAC program is to cut overpayments in half by 2012. In 2009, CMS identified $18 billion in improper Medicaid payments, compared with $24 billion in Medicare. Medicaid RACs cannot charge more than a 12.5 percent contingency fee, the same ceiling Medicare RACs have. States that allow a higher rate will have to pay the excess on their own.
4. RACs haven't been chosen yet. Each state is supposed to have contracted with a RAC by Dec. 31, 10 days before the comment period for the proposed rules ends, but it is not clear what contractors will be chosen. Several states could designate the same Medicaid RAC or choose a Medicare RAC. However, Medicare RACs are very focused on implementing the Medicare program. "They've got their hands full," Mr. Spencer says.
5. Rules carried over from Medicare RACs. The proposed rules for Medicaid RACs are very similar to those for their Medicare counterparts. That means hospitals only need to expand their RAC response teams using basically the same strategies rather than reinvent the wheel. Mr. Spencer says Medicaid RACs may start with certain "low-hanging fruit" already well picked by Medicare RACs, such as challenging hospital admissions of cardiac patients.
6. Implementation might be confusing. Unlike in the Medicare RAC program, two other agencies in each state will be reviewing provider claims and asking for penalties, creating a scene much like the Keystone Cops, as Mr. Spencer sees it. RACs may trip over the investigation units of each state Medicaid program or CMS Medicaid Integrity Contractors, which review one-third of the Medicaid programs every year. Obviously, two agencies cannot demand payment for the same claim, so they will need to coordinate activities, but "I'm completely at a loss as to how they will do that," Mr. Spencer says. The proposed rules do not provide much guidance on this.
7. Appeal overpayment decisions. Like their Medicare counterparts, the Medicaid RACs that state chooses will likely be small companies with little experience in this work. They will have to build up operations very fast, which can lead to many mistakes. In the Medicare RAC the demonstration project, the appeals rate was 8.7 percent and 64 percent of those were successful. With that kind of odds, it makes sense to appeal, Mr. Spencer says.
Find out more about Fi-Med Management.