And yet another RAC audit…

Section 1902(a)(42)(B)(i) of the Social Security Act requires states to contract with Recovery Audit Contractors (RACs) to identify underpayments and to recoup overpayments as part of the state plan. The Patient Protection and Affordable Care Act required the states to have contracted with one or more RACs by December 31, 2010.  Scheduled to begin April 1, 2011, the Medicaid RACs will be a bit different because of the different focus that could be seen by each state. There will be a large list of Medicaid auditors approved by each state.

In the September, 2010 Federal Register, CMS posted an “information collection request” about Medicaid RACs. They identified that contracts should be similar to those of the Medicare program. However, states may tailor the Medicaid RAC activities to the specific aspects of the Medicaid program in each state and collectively “propose targeted areas of susceptibility regarding improper payments.” Each state was required to amend their state plans reflecting the RAC program and attesting to a plan in place. This plan must also include Medicaid waiver contracts.

The RAC Medicaid requirements remain separate from the Medicaid Integrity Program (MIC) audits, which will continue. The RAC audits are additional Medicaid audits that the law requires to ensure plans under Parts C and D  have claims examined for reinsurance payments to determine if the claims costs are in excess of allowable reinsurance costs.  RACs are also to look at prescription drug plans for high cost beneficiaries.

New York State Medicaid Inspector General is leading the charge in attacking waste, fraud, and abuse, recently reminding home health agencies they “cannot bill for excluded providers or accept orders from excluded providers.” He has identified that many agencies were not appropriately verifying physicians approved for Medicaid payment.

In addition, the pressure is on to be certain that diagnosis codes, hospital admission and discharge codes, and procedure codes are all in order in all areas of health care. Coding, once again is at the forefront of audit review for all areas of healthcare.

Health care entities should review the annual OIG workplan, and besides the understood areas of risk; diagnoses coding, rehabilitation services, medical necessity, and adequate documentation, they might wish to add Medicaid Hospice services and being certain a process is in place to verify physician orders are not taken from Medicaid excluded physicians. How frequently is the exclusion list reviewed?

Risk areas identified by corporate compliance necessitate a policy and procedure to be in place with a method of verifying compliance to reduce corporate risk. Mandated corporate compliance programs are to become a reality in all areas of health care within the next few years. However, more and more organizations realize they need a corporate compliance program in place now. In case of a RAC, MAC, MIC, and especially in case of a Z-PIC or HEAT audit, establishing the view that you are compliance oriented with a compliance plan in place sends a far stronger positive message than you are waiting until a plan is actually mandated.

The OIG recently announced they will be reviewing “Medicaid Program Integrity Best Practices” in state Medicaid agencies especially in the areas of coding and payment risks. You may well have Best Practices in clinical areas but do you know that your billing practices follow Best Practices in Medicaid billing? You need to have this assurance.

For additional information:

Reminder: RAC facts

RACs can review via automated review (no medical record from the agency required) or a complex review which entails a medical record request.

The four present CMS approved RACs include:

RAC B: CGI Federal

RAC C: Connolly, Inc

RAC D: HealthDataInsights

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