New rule aims to cut Medicaid waste, fraud

Thursday - 11/11/2010, 4:11pm EST

By Jamie Blanco
Federal News Radio

The Centers for Medicare & Medicaid Services has new rules to fight waste, fraud and abuse, according to a release.

Under the new rules, states use contracted auditors to review Medicaid claims and identify and recover overpayments for services.

The initiative to establish Medicaid Recovery Audit Contractors -- or RAC's -- is part of the Affordable Care Act.

"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," said CMS Administrator Donald Berwick, M.D., in the release. "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."

According to the proposed rule, states must establish Medicaid RAC programs by the end of 2010 and fully implement their programs by April 1, 2011.

The rule would also require that states meets the Federal contribution to fund the RAC program.