On October 1, 2010, the Centers for Medicare and Medicaid Services (CMS) issued a State Medicaid Director letter (the “Director Letter”) which is the first of a “series of letters intended to provide preliminary guidance” on the implementation of the Medicaid Recovery Audit Contractor (RAC) program, as required by § 6411 of The Patient Protection and Affordable Care Act (PPACA). According to the Director Letter, CMS expects States to fully implement their Medicaid RAC programs by April 1, 2011.

As we reported in a prior Health Headline, States must submit a State Plan Amendment (SPA) attesting that the State will either establish a Medicaid RAC program or seek exemption from the program by December 31, 2010. While the Director Letter provides that “CMS anticipates granting complete Medicaid RAC program exceptions rarely and only under the most compelling of circumstances,” States may request exceptions from Medicaid RAC program requirements. The Director Letter acknowledges that there are several operational and policy considerations that need to be considered in the Medicaid RAC program, including:

  • Qualifications of Medicaid RACs;
  • Required personnel – for example physicians and certified coders;
  • Contract duration;
  • RAC responsibilities;
  • Timeframes for completion of audits/recoveries;
  • Audit look-back periods;
  • Coordination with other contractors and law enforcement;
  • Appeals; and
  • Contingency fee considerations.

The Director Letter stated that some of the operational and policy considerations noted above will be addressed in future rulemaking. Notably, the Director Letter provides that the Medicaid RAC program may not “supplant existing State program integrity or audit initiatives,” and “States must maintain [current] efforts uninterrupted with respect to funding and activity.” CMS further clarifies in the Director Letter that the interface between Medicaid RACs and Medicaid Integrity Contractors (MICs) will be explained in supplemental guidance.

The Director Letter further provides that States are not required to adopt new administrative review processes to accommodate the Medicaid RACs “so long as States are able to accommodate Medicaid RAC appeals within their existing Medicaid provider appeal structure.” The Director Letter also addresses the need to ensure that Medicaid RAC audits do not overlap audit efforts of other government contractors and State and Federal law enforcement entities.

A copy of the State Medicaid Director Letter is available by clicking here.

To view the prior Health Headline regarding the implementation of the Medicaid RAC program is available by clicking here.