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Medicaid begins new claim audit program in January

February 7, 2012

The U.S. Department of Health & Human Services (HHS) is launching a new Medicaid Recovery Audit Contractor (RAC) program under which state Medicaid programs will begin using independent auditors to retroactively review claims for improper payments beginning Jan. 1, 2012.

Optometrists who see Medicaid patients should take note of the program and take steps to ensure strict compliance with program billing regulations, according to the AOA Advocacy Group.

Four out of five Medicaid patients with eye or vision care problems receive care through an optometrist.

The department released details of the program Sept. 14 as part of a package of program integrity measures authorized under the federal Affordable Care Act.

Under the program, independent auditors, retained by state Medicaid programs, will search for fraud, waste and abuse by reviewing past claims that already have been paid.

Auditors will be compensated based on a percentage of funds they recover that were paid inappropriately to doctors, hospitals and others.

They will also be paid a percentage when they find underpayments that must be reimbursed to health care practitioners or institutions.

“The Recovery Audit Contractors (RACs) detect and correct past improper payments. RACs review claims after payments have been made, using both simple, automated review processes and detailed reviews that include medical records,” according to the HHS.

State Medicaid programs are already required to screen incoming claims using in-house auditors for compliance with billing rules and refer information on physicians or providers with a pattern of billing irregularities to a network of Audit Medicaid Integrity Contractors (Audit MIC) for comprehensive audits of their practices or businesses by outside auditors.

However, the Medicaid programs never before have been required to use outside auditors for routine claims review.

Nor have they retroactively reviewed claims on a regular basis and sought return of reimbursements from physicians or providers when inappropriate payments were uncovered.   

The new Medicaid RAC program is modeled after the Medicare Recovery Audit Contractor Program that was implemented nationwide last year.

The Medicare outside auditing program has recovered $670 million in improper payments so far this year and increased eight-fold the amount of inappropriate payments recovered by the health plan, according to the HHS.

However, the Medicare RAC has come under fire from some practitioners for overly aggressive auditing.

Medicare and Medicaid auditing programs now in effect have generally found optometrists to have a good record for appropriate billing, the AOA Advocacy Group notes.

Stepped-up efforts by HHS and other government agencies over recent years to prevent waste, fraud, and abuse have resulted in few actions against optometrists. 

However, with optometrists providing the overwhelming majority of eye and vision care for Medicaid patients, and a significant percentage of Medicaid claims soon to be routinely reviewed by outside auditors, the AOA Advocacy Group is concerned that relatively minor mistakes made on Medicaid claims over a period of time could result in some practices being asked to return substantial amounts of Medicaid reimbursement.

Such requests could constitute a significant financial hardship for a practice, the AOA Advocacy Group notes.

The prospect of retroactive audits may further diminish the ranks of practitioners willing to see patients under Medicaid, a health plan that is already struggling to maintain an adequate number of providers, an AOA Advocacy Group staff person noted.

Based on comments from the AOA and other health care provider associations, the HHS is limiting the frequency and age of claims Medicaid RACs can request from claimants for review.

Auditors will be allowed to review claims as far back as three years.

Also at the request of health profession organizations, RACs are required to employ a staff consisting of nurses, therapists, and certified coders, with a physician as the medical director for the program.

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