Physicians, practices, and facilities that provide services under Medicare Parts A or B are very familiar with recovery audit contractors (RACs).  These companies contract with the Centers for Medicare & Medicaid Services (CMS) to detect improper Medicare payments, collect overpayments, identify underpayments, and improve the handling of Medicare’s payment processes.  As part of a move to “fight fraud, strengthen Medicare and protect taxpayer dollars,” the Patient Protection and Affordable Care Act (PPACA or Act) expands the RAC program into Medicare Advantage (Part C), Medicare Prescription Drugs (Part D), and Medicaid.  You can find these provisions in Sec. 6411 of the PPACA.

Medicare Parts C and D

The PPACA requires the Secretary of the U.S. Department of Health and Human Services (DHHS) to form contracts with RACs to ensure that every Medicare Advantage (Part C) and prescription drug (Part D) plan has an effective anti-fraud program.  Part D RACs will also be charged with examining claims for reinsurance payments and review a plan’s enrollment estimates pertaining to its high-cost beneficiaries.  These contracts must be in place by December 31, 2010.

Medicaid

The Act also requires North Carolina Medicaid to contract with at least one RAC “for the purpose of identifying underpayments and overpayments and recouping overpayments” by December 31, 2010.  The RAC will be paid on a contingency basis, a precarious arrangement that incentivizes the RAC to find and recover as many overpayments to physicians as possible (a.k.a. “RAC-Attacks”). The State must offer an adequate appeal process for providers who are subjected to an adverse determination.

Next week in Focus on Health Care Reform, “Shared Savings Program” (ACO).

Click here to view all articles published in our series, Focus on Health Care Reform.

Read a review by the NCMS blogging team of an excellent article on the power of “no,” written by New York Times reporter David Leonhardt.