Resources are issue with CMS' Medicaid claims audit program

A new Medicaid recovery audit contractor (RAC) program will help strengthen the integrity of the Medicaid program, according to Xiaoyi Huang, JD, assistant vice president for policy at the National Association of Public Hospitals and Health Systems in Washington, DC. "That being said, we need to be cognizant of program integrity efforts that places undue burden on providers," she cautions.

According to the final rule from the Centers for Medicare & Medicaid Services (CMS), states must implement Medicaid RACs by Jan. 1, 2012. The RACs will search for fraud, waste and abuse in the program by reviewing past claims that already have been paid, with auditors paid based on the percentage of funds they recover that were paid inappropriately.

The Department of Health and Human Services estimates that Medicaid RACs will save the program $2.1 billion over the next five years, of which $900 million will return to states. However, Ms. Huang argues that CMS could have made the program better in several respects, such as requiring RACs to hire auditors with knowledge of the details of the state Medicaid plan.

Given that the Medicaid program is highly complex and very state-specific, many issues could be open to interpretation, including coverage of benefits, explains Ms. Huang. "Without someone with expertise in and knowledge of the details of the state Medicaid plan, the Medicaid RAC should defer to state's interpretation where opinions differ," she says.

Another concern is that providers will be burdened in trying to meet the needs of multiple Medicaid auditors, says Ms. Huang, noting that the final rule states that a RAC should not audit claims that have already been audited or that are currently being audited by another entity.

"When another Medicaid auditor's scope overlaps with the Medicaid RAC's scope, then the state should not need to contract with a RAC to complete its audit," says Ms. Huang.

No significant recoveries

Kelly Shropshire, director of Oklahoma's Program Integrity and Accountability, says the fiscal impact of the new program is unknown at this time. "We have yet to implement the RAC program, nor can we pull from other state Medicaid program experiences. The program is still in its infancy and no outcomes have been realized," he says.

However, Mr. Shropshire notes that other recent federal audit initiatives, such as the Medicaid Integrity Contractors and the Medi-Medi program, which analyzes data from both the Medicaid and Medicare claims processing systems, have been established in Oklahoma for approximately two years.

"We have yet to see any recoveries at this time. While this will change over time, we do not expect to see any significant financial recoveries from these programs," says Mr. Shropshire. "Certainly, some benefit is achieved from the sentinel effect of having these oversight programs, but quantifying such is an estimate at best."

The RAC contractors are specialists in recovery of inappropriate payments and have had success in the Medicare program, adds Mr. Shropshire, but whether they will be successful in Medicaid remains to be seen. "Whether they will be successful in states with existing strong program integrity programs like Oklahoma is even more difficult to predict," he adds.

Inadequate staffing

The Oklahoma Health Care Authority is responsible for provider appeals regarding identified overpayments, says Mr. Shropshire, and depending on the volume, this could be very burdensome on the agency's legal division.

"Coordination of these audits will be yet another entity that staff will have to work with, to ensure that no duplication of efforts are occurring," he says.

The agency would be interested in an exemption from the Medicaid RAC program, according to Mr. Shropshire. "CMS has made it very clear that exemptions will be few and far between," he acknowledges, adding that the agency's existing program integrity program and low PERM error rates could merit such consideration.

Contact Ms. Huang at (202) 585-0127 or and Mr. Shropshire at (405) 522-7420 or