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The Affordable Care Act mandated that States and territories establish RAC Programs. The CMS Final Rule, published September 16, 2011, required states to implement their Medicaid RAC programs, absent an exception, by January 1, 2012. Fast-forward to late 2016, and the DME Industry is finally starting to see the effects of this implementation. In recent weeks, suppliers have begun receiving overpayment notifications from Medicaid RAC contractors, in some instances, for amounts nearing $100,000. For suppliers all too familiar with Medicare RACs, the Medicaid RAC program is very different. This is because Medicaid RACs are established by each state, and allowed flexibility to design their programs, wherein CMS oversees the Medicare RAC program, with established guidelines and requirements. What other differences can you expect from a Medicaid Recover Auditor? The chart below will provide some insight into the variances of a Medicare RAC audit versus a Medicaid RAC audit.
  Medicare RAC Medicaid RAC
Look Back Period 3 years from the paid date 3 years from the file date, unless approval from the State is received. Will vary by RAC.
Advance Notice of Audit “CMS Approved Issues” on RAC websites notifies suppliers of audit activities No requirement to notify suppliers of audits in advance
Good Cause to Reopen a Paid Claim 42 CFR §405.986 requires RACs to establish good cause to reopen and review a claim that as already paid No. States have flexibility to require RACs to develop criteria in order to review a paid claim. Will vary by RAC.
Awarded Contingency Fees Yes Yes
Appeals Process Claims deemed overpaid can be appealed through regular Medicare appeals channels (i.e. Redeterminations, Reconsiderations, ALJ) States have flexibility to determine the appeals structure. Will vary by RAC.
Duplication of Review Efforts RACs must coordinate with ZPICs/PSCs to ensure claims previously reviewed by the cannot be re-reviewed by the RAC States are encouraged to coordinate auditing efforts among other contractors, entities, or agencies. If a supplier is already being audited by a Federal/State law enforcement agency, then such agency’s audit activity takes precedence over the Medicaid RAC. However, the Medicaid RAC (overpayments/underpayments) can audit a claim that is also being audited by the Medi-Medi contractor (Medicare fraud, waste, and abuse)
Potential for Extrapolated Overpayments Yes Yes, but subject to approval.
  Given that the states are not required to post their audit activity, the question on everyone’s mind is, “what types of services are currently being audited?”. So far, The van Halem Group has seen two types of audits from Medicaid RACs:
  • Certain life-sustaining and respiratory related equipment considered to be indefinite rentals - Ventilators (E0463/E0464) and Oxygen (E1390/E0431)
  • Inpatient stays - DME provided while the beneficiary was in a nursing home
If you receive an overpayment notification letter from a Medicaid RAC, review the letter carefully. As noted previously, each Medicaid RAC has different program requirements, including their appeal options. Review the letter to determine why your claims have been identified as overpaid and, if you disagree, determine how to appeal. Be sure to pay attention to the timelines established in the letter, as deadlines will also differ depending on your state. Should you find yourself victim to a Medicaid RAC, The van Halem Group can help! Our reactive services include review of your patient files by a member of our clinical team and guidance through the appeal process to include submission and tracking. Contact us for more information on how we can help you! www.vanHalemGroup.com