Medicaid agency proposes new fraud-fighting regulations

The Centers for Medicare and Medicaid Services (CMS) on Friday proposed new rules for the use of private contractors that work for states to audit Medicaid payments. The Recovery Audit Contractors (RAC) will function similarly to the way they do in the Medicare program, where they audit payments that may have been underpaid or overpaid, and recover overpayments or correct underpayments.

"Reducing improper payments is a key goal of the Administration, and the tools provided by the Affordable Care Act will help us achieve that goal," CMS Administrator Donald Berwick said in a statement announcing the rules. "We are using many of the lessons that we learned from the Medicare RAC program in the development and implementation of the Medicaid RACs, including a far-reaching education effort for health care providers and State managers."

Under the new law, states must establish Medicaid RAC programs by submitting state plan amendments to CMS by Dec. 31. The proposed rule details how states can get extensions or exceptions and outlines federal contributions to the program as well as the requirements that states must meet.