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Frequently Asked Questions

These are some of the most common questions we’ve been asked about Medicaid Recovery Audit Contractors (RACs). If you have a question about Medicaid RACs, please submit it to us using the form below and we will respond as well as post the question and response on the website.

Please use this form ONLY to contact us regarding Medicaid RAC questions. If your issue is not Medicaid RAC related, please email us at info@hms.com.

  1. How is the Medicaid RAC program different from the Medicare RAC program?

    Unlike the Medicare RAC program, which is run by the Centers for Medicare and Medicaid Services (CMS), the Medicaid program is administered by the states. This means that each state has flexibility in terms of the design and operation of their Medicaid RAC program. Consequently, there are significant variations in how the Medicaid program works in each state—including in the types of audits conducted, data types and formats required, appeals processes, and regulations.

  2. What are RAC-like contracts?

    The term RAC-like is used by states that have been operating recovery audit programs or contracts prior to the Affordable Care Act.

  3. Does the Medicaid RAC requirement apply to U.S. territories—including Puerto Rico and the U.S. Virgin Islands?

    Yes, the U.S. territories are included in the Medicaid RAC component of the Affordable Care Act.

  4. What are the risks, if any, for managed care organizations if they decide to partner directly with Medicaid RACs?

    Plans will need to explore the risks of this approach, as part of developing the relationship with the state(s). If they engage in joint auditing, then they will need to figure out what their exposure is, since the state contractor will know at a detailed level, about their provider contracts, payment methods, and overpayments. If they implement an “MCO RAC” that mirrors the state’s standards, and they operate an expanded RAC-like program that parallels—but is separate from—the state, plans can keep more control, and may reduce their exposure to being audited by the state.

  5. How are the Medicaid RACs different from Medicaid MIC?

    The most significant difference is that MICs are run and operated by CMS. With the RACs, CMS has delegated the responsibility to the states.

  6. Does HMS® do anything to reduce the burden on providers during the audit process?

    HMS understands the potential burden placed on providers from Medicaid RAC audits. Our emphasis is on making the process as streamlined as possible on providers so they can stay in compliance while focusing on quality patient care. HMS has a full-time Provider Relations team, focused exclusively on responding to provider inquiries regarding the Medicaid RAC review and recovery process. The company offers a 24/7 web-based Provider Portal to help providers navigate the audit process, including responding to requests and submitting questions.

  7. What makes Medicaid RAC contractors qualified to review hospital records?

    Each Medicaid RAC contractor is required to have a full-time medical director on staff, along with certified medical coders, nurses, therapists and director-level physicians. The staff maintained by RACs mirror those in the provider community in order to ensure that RAC recommendations are based on the findings of experts.

  8. Are there provisions in place to protect hospitals and providers during the auditing process?

    Yes. While hospitals are not reimbursed for the costs associated with providing medical records, they may appeal findings if they disagree with an allegation of improper billing or fraud. The appeal processes for the various states may differ, but they are likely governed by the state’s administrative procedures act. Medicaid RACs will be bound by state statutes, regulations, and the Medicaid Manual.

  9. Is it true that Medicaid RAC contractors only get paid if they recover dollars for Medicaid?

    Yes. RACs only collect fees on overpayments that are recovered and underpayments that are corrected. In addition, RAC contractors must return any recoveries that are reversed after a provider appeal. This means that auditors are incentivized to pursue only those claims they can prove are inaccurate.

  10. Does the Medicaid RAC program impact the quality of patient care or take money away from hospitals that could be used for care?

    No. It’s important to understand that RACs do not deny care or impact clinical decisions made by providers. RACs review claims after care has been provided to the patient. Hospitals have already received their Medicaid payments by the time an audit is conducted.