Medicaid RAC overkill
Reviews of medical treatment worry hospitals
Hospitals fear Medicaid’s new audit program could mean multiple examinations of the same issues from different reviewers, as well as more reviews of the medical necessity of hospital care.
The final rule establishing a Medicaid recovery audit contractor program addressed some concerns raised by hospitals over an earlier draft, but not all of them.
The new program, set to begin Jan. 2, 2012, under regulations issued last week, comes as the Obama administration pushes various initiatives to reduce waste, fraud and abuse in federal healthcare programs. Several Republican members of the deficit reduction supercommittee last week called for more such efforts as a way to reduce health- care spending (See story, below).
Recovery audit contractors, which are paid contingency fees to identify improper payments, were deployed first in Medicare and extended to Medicaid by the Patient Protection and Affordable Care Act. They are expected to recover $2.1 billion from Medicaid providers over the first five years of the program, with the amount increasing in succeeding years, according to administration estimates. About $668 million has been recovered so far this year in the Medicare version of the program, according to a CMS official.
The CMS official said he expected that Medicaid RAC auditors, who will be paid by states, will receive 10% to 12% of recovered funds, about the same percentage as the CMS pays Medicare contractors.
The Medicaid audit program will allow states to design their own programs, with federal officials providing final approval.
Hospital advocates praised the final rule for directing states to create proper appeal processes for providers to dispute “adverse determinations” from the contractors and for encouraging contractors to focus on Medicaid underpayments, as well.
Another revision that drew positive reviews was the additional requirement that each contractor employ a full-time medical director. However, hospitals remain concerned that the regulations do not require those physicians to have any knowledge about the state’s Medicaid program.
“As everyone knows, every state Medicaid plan is incredibly complex and very unique,” Xiaoyi Huang, assistant vice president for policy at the National Association of Public Hospitals and Health Systems, said in an interview.
Hospitals also are troubled that the federal rules only “strongly encourage”—but don’t require—states to adopt rules aimed