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[Federal Register Volume 77, Number 37 (Friday, February 24, 2012)]
[Notices]
[Pages 11127-11128]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-4364]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-6034-N]

Medicaid Program; Announcement of Medicaid Recovery Audit 
Contractors (RACs) Contingency Fee Update

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice.

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SUMMARY: This notice announces an increase to the maximum contingency 
fee, for which Federal financial participation (FFP) will be available, 
that may be paid to Medicaid Recovery Audit Contractors (RAC) by State 
Medicaid programs as authorized by section 1902(a)(42)(B) of the Social 
Security Act (the Act), as amended by the Affordable Care Act, 
requiring States to establish Medicaid RAC programs. In the September 
16, 2011 Federal Register (76 FR 57808), we published a final rule that 
ties the Medicaid RAC contingency fee to the Medicare Recovery Audit 
Program with an opportunity for the States to request an exception to 
exceed the highest fee paid to a Medicare Recovery Auditor. Further, we 
indicated in the final rule that we would make States aware of any 
modifications to the payment methodology for contingency fee rates and 
Medicaid RAC maximum contingency fee rates by publishing a notice in 
the Federal Register. Therefore, this notice will inform States that 
Medicare has increased the maximum contingency fee paid to Recovery 
Auditors by 5 percent for the recovery of overpayments only for durable 
medical equipment claims (DME).

DATES: Effective Date: This notice is effective on March 26, 2012.

FOR FURTHER INFORMATION CONTACT: Lori Bellan, (410) 786-2048; or Joanne 
Davis, (410) 786-5127.

SUPPLEMENTARY INFORMATION:

I. Background

    In the September 16, 2011 Federal Register (76 FR 57808), we 
published a final rule entitled: ``Medicaid Program; Recovery Audit 
Contractors.'' This final rule finalized provisions related to the 
implementation of a Medicaid Recovery Audit Contractor (RAC) program 
and provided guidance to States related to Federal/State funding of 
State start-up, operation and maintenance costs of Medicaid RACs and 
the payment methodology for State payments to Medicaid RACs. In 
particular, and as stated in 42 CFR 455.510(b), States must determine 
the contingency fee rate to be paid to Medicaid RACs for the 
identification and recovery of Medicaid provider overpayments. We also 
indicated at 42 CFR 455.510(b)(4):

[T]he contingency fee may not exceed that of the highest Medicare 
RAC, as specified by CMS in the Federal Register, unless the State 
submits, and CMS approves, a waiver of the specified maximum rate. 
If a State does not obtain a waiver of the specified maximum rate, 
any amount exceeding the specified maximum rate is not eligible for 
FFP, either from the collected overpayment amounts, or in the form 
of any other administrative or medical assistance claimed 
expenditure.

    The September 16, 2011 final rule contains additional information 
about the process States must follow to obtain an exception to the 
specified maximum rate.

II. Provisions of the Notice

    In the final rule at 42 CFR 455.510(b)(4), we stated that the 
contingency fee paid to the Medicaid RAC may not exceed that of the 
highest fee paid to a Medicare Recovery Auditor, unless the State 
submits, and CMS approves, an exception to the specified maximum rate, 
as specified in the Federal Register.
    On June 1, 2011, we increased the contingency fee by 5 percent for 
the recovery of overpayments associated with DME claims that were 
identified by the Medicare Recovery Auditors. Therefore, the 
modification increases the maximum contingency fee paid to a Medicare 
Recovery Auditor to 17.5 percent for DME claims only. As a result of 
this modification, we now authorize States to pay their respective 
Medicaid RACs a contingency fee up to 17.5 percent of the recovered 
overpayment, the current highest contingency fee paid to Medicare 
Recovery Auditors, for the recovery of improper payments made for 
medical supplies, equipment and appliances suitable for use in the home 
found within the Medicaid home health services benefit authorized by 
section 1905(a)(7) of the Act. We note that this increase in the 
maximum fee for which FFP is available for payments to Medicaid RACs 
applies only to fees paid for the recovery of improper payments of this 
subset of claims. The current highest contingency fee paid to Medicare 
Recovery Auditors for the recovery of improper payments made on all 
other types of claims remains the same at 12.5 percent; thus, the 
maximum fee that may be paid to Medicaid RACs for the recovery of 
improper payments on other types of claims similarly remains at 12.5 
percent. This policy is consistent with section 1902(a)(42)(B) of the 
Act, which requires States to contract with Medicaid RACs ``in the same 
manner as the Secretary enters into contracts'' with the Medicare 
Recovery Auditors. The policy is also consistent with guidance provided 
in the final rule which aligns the Medicare Recovery Audit Program and 
Medicaid RAC program, to the extent possible.

III. Collection of Information Requirements

    This notice does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 35). However, it does 
reference previously approved information collections. As stated in 
section I of this notice, States must submit justifications to CMS to 
receive an exception to pay Medicaid RACs a contingency fee that 
exceeds the highest fee paid to a Medicare Recovery Auditor.

    Authority: Catalog of Federal Domestic Assistance Program No. 
93.778, Medical Assistance Program.

[[Page 11128]]

    Dated: February 8, 2012.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2012-4364 Filed 2-23-12; 8:45 am]
BILLING CODE 4120-01-P
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