EDITOR’S NOTE: This is the final installment of a two-part series on the Medicaid RACs.

A review of the final rule implementing the Medicaid recovery audit contractor (RAC) program shows that there are several proactive steps that hospitals may take to keep on top of this implementation, yet another, claims review of Medicaid claims to identify improper payments. Since the program officially takes effect on January 1, 2012, the timing is perfect to investigate options. One of the first steps — besides actually reviewing the final rule — is to review the Medicaid RAC’s Statement of Work (SOW).

Hospitals should obtain a copy of the Medicaid RAC’s SoW as soon as possible, so they will be aware of things like the expertise and/or credentials of the RAC staff who will be performing the coding reviews.

Medicaid RACs may hire coders with credentials that are more suitable for outpatient coding reviews, and these individuals may or may not have the skills needed to perform inpatient coding reviews.  Hospitals should be prepared to deal with the “learning curve” of these coders.

Some states may have area-specific issues that should be audited, so CMS gives those states the authority to establish their own audit initiatives—another reason to obtain and review the Medicaid RAC SoW.

Multiple Medicaid Audits

Can you successfully juggle all of the audits that could take place? Consider that the following may be somewhere in the wings: the states’ routine program integrity auditors, Medicaid integrity contractors (MICs), payment error rate measurement (PERM) auditors, and the new Medicaid RACs.

When it passed the Affordable Care Act, Congress did not relax any previously authorized program-integrity activities. Therefore, states cannot supplant existing program integrity initiatives with a Medicaid RAC program because there are fundamental differences between the two audit programs, which utilize complementary approaches.

For what it’s worth, CMS is aware that the multiple auditing entities may perform overlapping audits of the same provider’s claims and hopes that possibility may be minimized. To that end, CMS states that RACs should not review claims that have already been subject to audit or that another entity is currently auditing.

Of course, subsequent reviews of claims by other auditing entities may be necessary or otherwise unavoidable, according to CMS. States have the flexibility to determine the best method of coordinating multiple Medicaid audit activities with the resources available—even though there will be different challenges to achieve this state-by-state.

Lobby for Physician Involvement

Medical-necessity reviews by Medicaid RACs are permitted to the extent that they are consistent with state laws and regulations.

In the Medicare RAC programs, no physician involvement is required in medical necessity-reviews, and no physician approval is required in the validation of a medical-necessity review denial. However, Medicaid RACs may form panels of practicing physician specialists who advise them on medical issues. Registered nurses must be utilized and the Medicare RAC must, generally, employ a medical director.

Since states have the flexibility to determine the parameters for medical-necessity reviews, hospitals may want to lobby (through their state hospital association, for example) for physician involvement in these reviews. The education and experience of physicians may prove beneficial for hospitals when cases are being reviewed for medical necessity.

Investigate Electronic Efficiencies

In order to limit providers’ costs of copying and mailing records requested for review, CMS requires mandatory acceptance by the Medicaid RAC of provider submissions of electronic medical records on CD/DVD or via facsimile. Hospitals should explore the costs associated with copying and mailing records versus the electronic submission of them. Even if the medical records are not electronic, it may be more cost efficient for the hospital to hire someone to serve as a document-scanning technician to transfer the requested records onto a CD/DVD.

About the Author

Kim Charland is vice president of consulting and a health-information management (HIM) thought-leader at Medical Learning, Inc. (MedLearn), a Panacea Healthcare Solutions Company, St. Paul, MN. Her professional experience includes extensive project management as well as 20 plus years in HIM and reimbursement management for hospitals and physician offices.

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