Medicaid Recovery Audit Contractor Audits

Page Updated: Oct. 10, 2024

CHA Advocacy Principle: Doctors and hospitals are committed to compliance and stewardship of Medicaid dollars; however, audits are incredibly time consuming, especially when they are driven by financial scavenger hunts, not patient needs. Audits should be warranted, effective, and efficient.

What Has Been Completed:

Origin: The Affordable Care Act requires states to contract with an outside vendor to review provider claims and propose/complete audits to detect and address Medicaid overpayments.  

Background: There has been an uptick in audit activity and concerns that it is occurring without transparency and accountability from HCPF at a time when hospitals and doctors continue to face significant capacity challenges. In 2023, CHA worked with the General Assembly to pass House Bill (HB) 23-1295 to make several changes to reviews and audits of payments to providers by HCPF and associated processes to recover overpayments or reimburse providers for underpayments.

Outstanding Items:

The bill required the office of the state auditor to conduct a comprehensive audit to review Colorado’s Medicaid RAC audit practices. Additionally, HCPF must hold quarterly provider convening meetings and trainings, create a RAC provider advisory group, and publish audit activity reports. The state auditor contracted with BerryDunn to perform the audit. The final audit was released in May, 2024, and provided extensive background that affirmed the significant, ongoing difficulties providers continue to experience with this program. On May 1, HCPF provided three Medicaid updates: 

On May 1, HCPF provided three Medicaid updates:

1. Initial Hospital Care Codes. The Medicaid Recovery Audit Contractor (RAC) is updating the audit of initial hospital care codes and will no longer audit claims before 2023. CHA got involved in this audit in November 2022 due to concerns from hospitalists. On Jan. 1, 2023, the American Medical Association (AMA) made many changes to the Evaluation and Management (E&M) Current Procedural Terminology (CPT) medical billing codes. This includes the initial hospital care codes (99221-99223). HCPF has halted mailing on this audit and will ensure that no other notices are mailed for medical claims billed before 2023. Overpayments will only be identified for claims billed in 2023 when a physician from the same specialty and subspecialty who belongs to the same group practice billed the initial hospital care code (99221-99223) for the same patient during the same inpatient admission. These same criteria will be applied to all existing informal reconsideration requests and appeals identified through this audit. Going forward, HCPF will use the E&M medical coding that was in place at the time the claim was billed, which is the normal process for any RAC audits.
2. National Correct Coding Initiative (NCCI) Edits – Professional Claims. CHA provided support for durable medical equipment providers as a part of its coalition work. This audit was impacting patient access to equipment needed to keep patients out of the hospital. Following CHA’s advocacy, the RAC has halted this audit to reprogram the audit logic. Several NCCI deactivations were unknown until providers and associations reached out, sent in documentation, and gave HCPF feedback. Two specific edits from NCCI were deactivated, which allowed providers to bill for incontinence products in multiple sizes and wheelchair back-ups. HCPF and Health Management Systems, Inc. (HMS) apologize for the miscommunication and any burden this may have placed on providers. Providers can expect to get updated notices with corrected findings. Any overpayments which were processed in error will be returned to providers from HCPF. Since HCPF has now identified a large amount of documentation for NCCI deactivations, it is adding all previous deactivations to a repository and to a database. HCPF also now has tracking to ensure that any changes in the claims system that allow specific billing due to deactivations are tracked so this issue does not occur again.
3. RAC Program Enhancements Going Forward. HCPF has upcoming enhancements and updates for complex audits, rebilling, and reporting, which will be communicated to stakeholders via email blast, posted on its website, and provided to associations. If stakeholders have any suggestions or comments on how HCPF can do a better job, please use the communications form, which has been updated to work as a “ticket system.” The ticket system will enable HCPF to provide feedback more efficiently, track communications as they come in, and provide response timelines.

Outstanding Items: 

HCPF is in the process of restarting inpatient audits and rolling out rebilling processes. Those materials can be found here. 

Resources: 

• 1. HCPF RAC Website  
  2. RAC Coalition Whitepaper
  3. CHA and Colorado Medical Society Letter to HCPF regarding rule enhancement
  4. CHA One-Pager on HB 23-1295
  5. CHA Issue Brief
  6. Audit of the Colorado Office of the State Auditor’s Evaluation of the RAC Program 
  7. CHA and provider coalition letter to the Joint Legislative Audit Committee, Aug. 6, 2024
  8. HCPF RAC Information
  9. HCPF request email: [email protected]

Meetings/Dates of Note:

• • Nov. 13, 2024 – HCPF Quarterly Provider Meeting
  • Dec. 12, 2024 – HCPF RAC Provider Advisory Board Meeting – register here

CHA Staff Contact: Megan Axelrod, CHA senior director of regulatory policy and federal affairs, [email protected]