1. Exempt some states from RACs. States with Medicaid Integrity Programs or similar audit programs should be allowed to opt out of the Medicaid RAC program. States that operate a Medicaid managed care program should also be exempted, since these programs also subject providers to audits.
2. Exempt payment reform pilots. Pilots and demonstrations on payment system reform should also be exempted from RAC reviews, because there may be a conflict in program requirements.
3. Adopt Statement of Work improvements. In the Medicare RAC demonstration, CMS worked with hospitals to create improvements that were incorporated in the Medicare RAC Statement of Work, but there is no such provision for the Medicaid RAC program.
4. Exclude medical necessity reviews. CMS should exclude medical necessity reviews from the Medicaid RAC program. In the Medicare demonstration, such reviews “led to aggressive and inappropriate medical necessity denials,” the letter stated. Appealing each inappropriate denial costs hospitals an average of $2,000 per appeal and take 18-24 months to complete.
5. Mitigate incentives for aggressive denials. If medical necessity reviews have are allowed, CMS should mitigate incentives for aggressive or inaccurate denials. For example, RACs should have to demonstrate a pattern of error and such reviews should be conducted only by physicians with appropriate training.
6. Prohibit duplication of audits. In states that already have a Medicaid audit program, Medicaid RACs should be barred from conducting audits on claims that are under review by the audit program.
7. Limit requests for medical records. CMS should limit the number of medical records that a Medicaid RAC can demand, as is done in the Medicare RAC program. Medicaid RACs should also be required to accept medical records electronically and pay the copying and mailing costs of medical records that are mailed in.
8. Define types of improper payments. CMS should establish the types of improper payments that Medicaid RACs can review. “Supplemental payments such as disproportionate share hospital and other special hospital payments should be excluded from the purview of the RACs,” the leter states.
9. Limit look-back period. CMS should establish a 12-month look-back period for RAC reviews, so that RACs do not incorrectly apply new payment rules to old claims.
10. State should approve new issues. RACs should apply to states for permission to audit new payment issues.
11. Require RACs to provide rationale. RACs should be required to provide a case-specific rationale for each denial determination.
12. Set a timeframe for RAC determinations. CMS should specify timeframes for RAC determinations and for notification of the determinations.
13. RACs should verify addresses. To ensure correspondence reaches the hospital, RACs should be required to verify addresses and points of contact beforehand. When correspondence is sent to the wrong address, hospitals should more time to respond.
14. Require RAC websites. RACs should be required to maintain websites showing approved audit issues and information on audits currently being performed. RACs should also provide a portal for hospitals to submit their contact information and provide customer service contact information.
15. RACs should provide a telephone number. Medicaid RACs should provide a telephone number for providers to get their questions answered, and they should be required to respond in a timely manner.
16. Monitor RACs more closely. CMS and state Medicaid agencies should more closely monitor Medicaid RACs. At least one staff person on the state Medicaid agency should be responsible for RAC oversight, and that person should have regular discussions with the RAC and help hospitals resolve disputes with RACs.
17. Require RACS to hire physicians. Each RAC should have a medical director and at least one full-time physician per 400,000 Medicaid discharges to conduct reviews, provide clinical guidance and respond to provider inquiries on denied claims.
18. Mandate extensive training for auditors. RAC auditors should be “comprehensively trained on Medicaid payment and coverage policy related to all target areas approved by the state, billing and re-billing protocols, and the Medicaid appeals process,” the letter stated.
19. Set up a discussion period. CMS should require a discussion period between RACs and hospitals to confirm the accuracy of RAC findings, as it has done for the Medicare RAC program. The Medicare RAC discussion period has significantly reduced the number of inappropriate denials, the letter stated.
20. Strengthen the appeals process. States should be required to set up a robust appeals process with multiple levels of appeal. RACs should not be allowed to recoup funds before the appeal is completed and they should be required to return their contingency fee if a denial is overturned at any stage of the appeals process.
21. Report rates of appeals and reversals. RACs should be required to report the number of claims appealed and the number of reversals of their decisions in a timely manner, and they should be held accountable for inappropriate denials.
22. Educate providers prior to reviews. RACs should be required to share information with hospitals on program operations and appeals processes before any reviews start. They should discuss types of claims approved for RAC review, how audits will be conducted, where providers can access information on status and outcome of audits and how the RAC will communicate requests and findings to the provider.
23. Pay RACs for finding underpayments. While Medicaid RACs must be paid a contingency fee for identifying overpayments, states are not required to pay them for finding underpayments. In the Medicare RAC demonstration, only 4 percent of improper payments RACs identified were underpayments. State Medicaid agencies should be required to carefully monitor the volume of underpayment audits conducted by the RACs and increase their underpayment fee when necessary.
24. Require ongoing fixes of the program. Based on program findings, CMS, state Medicaid agencies and RACs should educate providers and fix flaws in the payment system to avoid billing mistakes before they are made.
25. Recognize financial impact on hospitals. The proposed rule is incorrect in asserting that most providers will experience limited financial impact. The AHA’s most recent RACTrac survey found that the Medicare RAC program has impacted 72 percent of hospitals and 51 percent reported higher administrative costs because of RACs.
Read the AHA letter on Medicaid RACs.
Read more coverage of Medicaid RACs:
– 4 Ways Medicaid RACs Could Differ From Medicare RACs
– CMS Proposes to Let States Implement Medicaid RACs in April
