The Centers for Medicare & Medicaid Services (CMS) established the Medicaid Recovery Audit Contractor (RAC) program as a method for states to promote the integrity of the Medicaid program, pursuant to a requirement of the 2010 Patient Protection and Affordable Care Act (PPACA). Medicaid RACs will review claims for which payment has been made under Section 1902(a) of the Social Security Act or under any waiver of the State Plan to identify underpayments and overpayments and recoup overpayments for the states. [Code of Federal Regulations 42 CFR 455.506(a)].
The CMS Medicaid RAC final rule includes a number of provisions that respond to key industry concerns, including but not limited to:
- Medicaid RACs are limited to a three-year look-back period. Medicaid RACs must coordinate their RAC efforts with other auditor programs.
- Medicaid RACs are prohibited from auditing claims that other state agencies or contractors have already audited for the same issue.
- Medicaid RACs are required to notify providers of overpayment findings within 60 days.
- States are required to set limits on medical record requests.
- Medicaid RACs must employ at least one medical director.
Indiana Medicaid RAC
For the Indiana Health Coverage Programs (IHCP), the Office of Medicaid Policy and Planning (OMPP) implemented the CMS-required RAC program, which is delivered by the Family and Social Services Administration (FSSA) Audit Services staff.
Indiana Medicaid RAC Focus
The focus of the RAC includes credit balance audits of acute care hospitals. In addition, the RAC performs financial audits of long-term care (LTC) facilities.
Credit Balance Audits
Credit balance audits are one part of the Medicaid payment integrity reviews under the RAC program. The objective of these audits is to identify and recover overpayments. In the initial stages, the RAC program will focus on credit balance audits of hospital fee-for-service claims.
Long-Term Care RAC Audits
The FSSA Audit team conducts RAC audits of all IHCP providers enrolled as provider type 03 – Extended Care Facility, which includes the following specialty codes:
- 030 - Nursing Facility
- 031 - Intermediate Care Facility for Individuals with Intellectual Disabilities (ICF/IID)
- 032 - Pediatric Nursing Facility
- 033 - Residential Care Facility
- 034 - Psychiatric Residential Treatment Facility (PRTF)
LTC RAC audits are conducted on a two-year cycle. The audits include a comprehensive review of financial activity for Medicaid-enrolled residents in all IHCP nursing facilities. LTC RAC audits cover a three-year review period adjusted by a one-year look-back period from the date when each audit commences. Because claims filed within the most recent 12 months are excluded (due to timely filing allowances), audited claims can date back four years.
LTC RAC audits focus on, but are not limited to:
- Payments made for dates of service after date of discharge
- Duplicate Medicaid payments
- Appropriateness of reporting Medicare or other third-party payments
- Errors related to patient liability application or collection