​​​​​​Recovery Audit Contractor Program

Background

The Medicaid program is a cooperative Federal/State program designed to allow States to receive matching funds from the Federal Government to finance medical assistance to eligible low income beneficiaries. Medicaid was enacted in 1965 by the passage of the Social Security Act Amendments of 1965 creating title XIX of the Social Security Act.

The national Recovery Audit program is the product of a successful pilot program that utilized Recovery Auditors to identify Medicare overpayments and underpayments to health care providers and suppliers in randomly selected states. The demonstration resulted in millions of dollars in overpayments being returned to the Medicare Trust Fund and millions of dollars in underpayments returned to health care providers. As a result, Congress required the Secretary of the Department of Health and Human Services to institute (under Section 302 of the Tax Relief and Health Care Act of 2006) a permanent and national Recovery Audit program to recoup overpayments. 

Section 6411(a) of the Affordable Care Act amended section 1902(a) (42) of the Social Security Act to require that States and territories establish Medicaid Recovery Audit Contractor (RAC) programs.  States that have not received an exemption from the Centers for Medicare and Medicaid Services (CMS) are required by statute to contract with one or more RACs to identify overpayments and underpayments and to recover overpayments from Medicaid providers. 

Program Mission

The RAC program’s mission is to identify and correct improper Medicaid payments through the collection of overpayments and reimbursement of underpayments made on claims for health care services provided to Medicaid beneficiaries.   The program will enable the Centers for Medicare and Medicaid Services (CMS) to implement actions that will prevent future improper payments in all 50 states.

Recovery Audit Contractor

The Department of Health Care Services (DHCS) has contracted with Health Management Systems, Inc. (HMS) to act as the RAC for the State. For over 25 years, HMS has worked in the Medicaid claiming environment to identify, audit, and recover improper Medicaid payments for both Fee-for-Service (FFS) and managed care populations. HMS’s mission is to help protect the integrity of government-sponsored health and human services programs.  HMS is focused on delivering comprehensive solutions that allow healthcare dollars to reach more people, save taxpayer money, and make the system work better for everyone.  HMS is the Medicaid RAC in 23 states, works with 41 state Medicaid programs, and recovered over a billion dollars in payment errors as of 2013.

Providers Affected by the RAC Program

Providers whose services are billed through the State’s FFS Medicaid program and are paid under Title XIX of the Social Security Act are subject to review by the RAC.   Claim review by the RAC will be conducted no later than three years from the claims paid date. 

Who do Providers Contact with Questions?

Please send an email to DHCS at RAC@dhcs.ca.gov.

Off-Site Resources

CMS RAC Final Rule

Medi-Cal Provider Bulletins

Medi-Cal Provider Outreach and Education

Last modified date: 3/23/2021 4:35 AM