CMS Proposes to Let States Implement Medicaid RACs in April

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CMS proposes to set an implementation date of April 1, 2011 for the new Medicaid recovery audit contractor program, according to a new proposed rule from CMS.

Medicaid RACs, authorized by the healthcare reform law, are expected to be a bonanza for cash-strapped state Medicaid programs. Administration costs for the Medicare RAC demonstration project, for example, were 20 cents for each collected dollar. States will have broad discretion on the design of their RAC programs and the number of private contractors they have.

Much of the information in the proposed rule was part of CMS' first preliminary guidance letter to state Medicaid directors on Oct. 1. States must submit their plans for RACs to the CMS by Dec. 31, but extensions and exceptions are possible. The new rule, open for comment until Jan. 9, proposed that:

* States can request an exception from part of the new program, but the CMS would grant exceptions "rarely, and only under the most compelling of circumstances."

* Programs cannot pay a contingency fee higher than the 12.5 percent maximum for Medicare RACs, unless an exception is granted.

* States have the option of using an existing appeals process for Medicare RACs or coming up with their own.

* Payments from recovered amount can only be made after all available appeals have been exhausted.

Read the proposed rule for Medicaid RACs (pdf).

Read more coverage on RACs.

- 10 Key Findings From Latest AHA Survey on Recovery Audit Contractors

- Federal Report Urges CMS to Address Overpayment Issues Identified by RACs

- Top 10 Hospital Stories of 2010

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