Ever since the Centers for Medicare & Medicaid Services (CMS) formally announced the rollout of the Medicaid Recovery Audit Contractor (RAC) program in 2008, facilities have been working to keep up with their states’ various rules and regulations, as well as maintaining a functioning compliance program.

The Medicaid RAC program has a structure and focus that are similar to those of the Medicare RAC program, but Medicaid RAC states have the flexibility to design and implement much of the program operations and implementation, such as appeal processes, exclusion of certain claims, and the lookback period.

Because states have this autonomy, the one consistency in the Medicaid RAC program seems to be inconsistency. For example, while the largest Medicaid RAC currently encompasses four states and models itself after a Medicare RAC, using the same lookback period and chart request limits, Georgia’s Medicaid RAC allows for a five-year lookback period.

So far, the Medicaid RACs appear to be focusing on DRG validation in their audits. Although the majority of the medical necessity audits have targeted short stays for medical DRGs (such as chest pain, syncope and medical back pain, for example), there also have been reports of Caesarian section and pediatric case reviews.

To further complicate matters, there is no consistent. national appeals process. Each state develops its own process, based on the specific rules and regulations applicable to that state’s Medicaid program.

For now, compliance-related best practices remain the same. The best defense against Medicaid RACs, as with Medicare RACs, is to run a consistent and compliant program encompassing all admissions. Case management and utilization review (UR) staff initially should apply first-level review screening criteria to Medicaid fee-for-service (FFS) cases. If a case does not meet criteria, then it should be sent for a second-level medical necessity review performed by a physician advisor. The entire UR process should be documented and presented whenever any audit is performed.

In addition, be sure to broaden your scope of awareness beyond Medicaid RACs, as there also has been a reported increase in U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) activity related to Medicaid FFS cases. And finally, always remember to be compliant with the Conditions of Participation for each agency’s services.In California, specifically, there often are even more requirements to consider as they relate to Medi-Cal, California’s Medicaid Program. This includes two recent major changes. The first change affects the designated and non-designated public hospitals. Previously, these hospitals needed to go through a treatment authorization request (TAR), a precertification process with a Medi-Cal RN, for every Medi-Cal inpatient admission. However, effective June 1, 2013 for designated hospitals (and June 1, 2014 for non-designated hospitals), to decrease the administrative burden on the agency and increase the UR responsibility of the hospital, Medi-Cal no longer will require such requests to be filed.

Simply put, Medi-Cal has stated that there will be no denials. Instead, a public hospital’s UR process will be validated on a monthly basis by a random audit performed by Medi-Cal nurses. If a hospital fails the audit, it will receive continued UR education provided by Medi-Cal.

The second Medi-Cal change, effective on July 1, 2013, affects private acute-care hospitals – specifically, such hospitals are switching from per-diem payments to APR-DRG payments. Due to this change, these hospitals now only will be required to conduct the TAR process for acute-care admissions, not for observation or continued-stay reviews. California recently selected HMS as its Medicaid RAC, so hospitals likely will start to see audits of Medi-Cal cases by the end of the year.

Nonetheless, regardless of which state you reside in, education is key. It is important to be in constant communication with your compliance staff about changes and trends as they relate to Medicaid. As part of the Patient Protection and Affordable Care Act, Medicaid RACs are required to provide hospitals with education on procedures and processes. It is of paramount importance that your hospital take advantage of this offer of information from CMS.

About the Author

Dr. Ralph Wuebker serves as Chief Medical Officer of Executive Health Resources (EHR). In this role, Dr. Wuebker provides clinical leadership within EHR and works closely with hospital leaders to ensure strong utilization review and compliance programs. Additionally, Dr. Wuebker oversees EHR’s Audit, Compliance and Education (ACE) physician team, which is focused on providing on-site education for physicians, case managers, and hospital administrative personnel and on helping hospitals identify potential compliance vulnerabilities through ongoing internal audit.

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