December 21, 2010 News

Medicaid Audits To Expand in 2011

The use of recovery audit contractors (RACs) to review claims, a Medicare program in effect since 2006, will be extended to state Medicaid programs beginning in April 2011. The expansion of the program emerged from the Patient Protection and Affordable Care Act (PPACA), the national health care reform legislation passed earlier this year.

Recovery Audit Contractors 

Audits performed by RACs were mandated by the Tax Relief and Health Care Act of 2006 to identify improper Medicare payments. RACs have been free to examine all Medicare provider settings, including private practices. Hospitals, however, have been the main focus because the Centers for Medicare and Medicaid Services (CMS) has determined that hospitals have been lax in establishing edits to identify faulty claims and have not trained practitioners adequately in coding.

Medicaid claims are already subject to Medicaid integrity contract (MIC) audits, which examine integrity issues and overpayments; Medicaid RACs will not replace any existing integrity or audit initiatives or programs. The RAC audits will supplement the integrity programs already in place, and will look at both overpayments and underpayments. There are other differences between the RAC and the MIC programs—the lead time for submitting documentation is longer for the RAC than the MIC, and funding for the MIC is not based on a percentage of any overpayments uncovered, as it is for the RAC program.

States must submit to CMS by Dec. 31 amendments to their state plans that establish RAC programs. Full program implementation begins April 1, 2011, subject to extensions and exceptions.

Audit Process 

RAC auditors may review automated claims data or request medical records from the provider and conduct medical reviews (directed by a physician medical director with certified coders and, in some cases, nurses and therapists).

If an overpayment is discovered, providers will be expected to reimburse the Medicaid program. Otherwise, future payments will be withheld from the provider. The RAC would receive a fee equal to a designated percentage of the overpayment (established by the contract between the state and RAC).

Proposed regulations allow states to determine whether RACs are paid a designated percentage or under another fee structure for identifying underpayments.

Each state Medicaid agency will determine its own appeal process for providers who disagree with a RAC decision.

Preparing for RAC Audits 

Audiologists and speech-language pathologists should review their state Medicaid policy manuals to make sure they are familiar with scope of coverage, documentation, and coding rules. Members also should review ASHA's coding resources and guidelines for assistance in preparing claims. Medicare guidelines may also be helpful because Medicaid programs often adopt many of the Medicare rules.  

Mark Kander, director of health care regulatory analysis, can be reached at

Laurie Alban Havens, MA, CCC-SLP, private health plans and Medicaid advocate, can be reached at

cite as: Kander, M.  & Havens, L. A. (2010, December 21). Medicaid Audits To Expand in 2011. The ASHA Leader.


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