Health and Human Services Regulatory News - September 5, 2008  

Nationwide Implementation of Medicare RAC Program

CMS confirmed on August 13 that the permanent, nationwide Medicare Recovery Audit Contractor (RAC) program will be phased in this fall. The nationwide RAC program builds on a RAC pilot program from March '05 through March '08. CMS outlined changes designed to address provider input about the pilot program. CMS is hiring a validation contractor to review a random sample of each RAC's reviews; CMS will publish accuracy scores on each RAC annually; RACs will offer a 15 day discussion period for providers along with the usual appeals process; CMS will specify limits on the provider records that RACs can ask for; RACs must pay providers for copying of records; and RACs will develop web-based applications to facilitate management of record requests and reviews. Record requests will be limited to records for claims paid on or after 10/1/07. PCG can help Medicare providers to work with RACs and to strengthen internal compliance programs.

Tom Entrikin

SCHIP Expansion

USDHHS announced on August 14 that CMS will not take compliance action against SCHIP programs that choose to expand eligibility to children in families with income over 250 percent of the federal poverty level. This follows an April '08 GAO ruling that an 8/17/07 CMS SCHIP policy letter setting forth eight prerequisites for expansion was unlawfully promulgated by CMS; litigation brought by New York, New Jersey, Illinois, Washington and other states in US District Court; and, last but not least, California's announcement on August 12 that it would not comply with the CMS policy letter.    

Tom Entrikin

Tom Entrikin is a PCG manager and former Medicaid policy specialist with the U.S. Health Care Financing Administration (HCFA), now the Centers for Medicare & Medicaid Services (CMS).

U.S. Court in CA Enjoins 10% Reduction in MEDI-CAL Payments

On August 18, the U.S. District Court for the Central District of California granted a preliminary injunction enjoining the California Department of Health Care Services (DHCS) from implementing a 10% reduction in Med-Cal's reimbursement rates for certain providers.  The injunction applies to the reduction in Medi-Cal payments called for under a state law (AB 5) passed by a special session of the California Legislature in February 2008 to physicians, dentists, pharmacists, adult day healthcare centers, clinics, health systems and other providers as of July 1, 2008.  Federal District Court Judge Christina A. Snyder denied a preliminary injunction, however, to managed care plans and non-contract acute care hospitals, finding insufficient evidence that the implementation of AB 5 would result in irreparable harm to Medi-Cal patients.  The District Court's decision follows a decision on July 11, 2008 by the Ninth Circuit Court of Appeals, which held that plaintiffs could bring suit "under the Supremacy Clause (of the U.S. Constitution) to enjoin implementation of a state law allegedly preempted by federal law".  The plaintiffs are now free to pursue their claim that the reduction in reimbursement rates is inconsistent with the criteria contained in section 1902(a)(30)(A) of the Social Security Act.

Sam Fish

Senators Request More Transparency in Medicaid Waiver Approval Process

Finance Committee Chairman Max Baucus (D-MT) and Health Subcommittee Chairman Jay Rockefeller (D-WV) sent a letter on August 21 to DHHS Secretary Michael Leavitt urging DHHS and CMS to introduce more transparency and public input into the Medicaid program's waiver process.  As an example of why the senators believe more transparency is needed the letter cites a Rhode Island waiver proposal essentially asking the federal government for permission to convert its current Medicaid program from an entitlement to a block grant.  According to the senators, a "funding structure like the one in the waiver proposal, including the cap on federal funds, puts beneficiaries, providers, and the entire state at risk should health costs or enrollment rise faster than expected".

Sam Fish

Sam Fish is a legal consultant at PCG and formerly served as Chief Regional Counsel, New England Region, for the U.S. Department of Health and Human Services.