Volume 29, No. 10 December 2014

Louisiana Department of Health and Hospitals Issues RAC Emergency Rule

By: Michelle Buford, JD, RHIA

On November 20, 2014, the Louisiana Department of Health and Hospitals (DHH) issued an Emergency Rule implementing a Recovery Audit Contractor (RAC) program. This adds yet another layer to the growing number of Medicare and Medicaid auditors and program integrity activities. Below is a summary of the Emergency Rule.
The Medicaid RAC’s functions are:

  1. Reviewing claims within three (3) years of the date of initial payment looking back from the date of the RAC audit;
  2. Issue determination letters to provider(s) within 60 days of receiving all requested materials; and
  3. Ensure proper identification of records the RAC is requesting from the provider.

The scope of Medicaid RACs’ review excludes (i) claims within 90 days of implementation of any Medicaid managed care program that relates to the requested claims; (ii) certain claims relating to capitated Medicaid managed care programs; and (iii) medical necessity reviews of claims where the provider has obtained prior authorization for the service.

RAC documentation requests cannot exceed one percent of the number of claims filed by a provider in the previous state fiscal year during a 90-day period for the specific service under review. Each specific service identified for audit, however, is considered a separate and distinct audit. Providers will be allowed 45 days within which to submit documents requested by the RAC unless the parties mutually agree to an extension of Providers are allowed to submit medical records electronically. If the RAC requires that records be submitted in a non-electronic format, however, the RAC must reimburse the provider for the reasonable costs of reproducing the records.

There are informal and formal appeals processes available for providers to whom the RAC issues adverse determinations. These processes are outlined in the Emergency Rule. The good news is that no recoupment of any RAC-identified overpayments may occur until the provider has completed all informal and formal appeals.

DHH may impose penalties and/or sanctions against a RAC which inappropriately denies a claim(s). Those penalties and sanctions include:

  1. A monetary penalty up to ten percent of the cost of claims may be awarded to the provider; or
  2. Up to five percent of the RAC’s total collections must be paid to DHH.

The Emergency Rule may be found online at: http://doa.louisiana.gov/osr/emr/1411EMR065.pdf