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HHS releases Medicaid RAC final rule; program to save $2.1 billion

September 14, 2011
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The Department of Health and Human Services (HHS) today released its final rule for the Medicaid Recovery Audit Contractor (RAC) Program, a waste-cutting program created by the Affordable Care Act. HHS projects the program will save $2.1 billion over the next five years, of which $900 million will be returned to states. The new program is based on the Medicare RAC program, which has already recovered nearly $670 million to date in 2011, according to HHS. The final rule goes into effect on January 2, 2012.

The program forces states to contract with third-party auditors, which keep a contingency fee ranging between 10 percent to 12 percent based on the amount of improper payments identified. Under the rule, states are required to have an adequate process for providers to appeal adverse RAC determinations.

“Today we are building on an already successful program that targets improper payments in our health care programs and recovers those dollars, making Medicare and Medicaid more reliable and responsible,” said HHS Secretary Kathleen Sebelius. “We simply can't afford to see even one penny of our health care dollars wasted and expanding this program will help us reach that goal."

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