Industry News

CMS Increases Contingency Fee for Medicaid RACs.

Richard P. Kusserow | February 2012

The Centers for Medicare & Medicaid Services (CMS) recently increased the maximum contingency fee that the Medicaid RACs can receive for recovered overpayments of durable medical equipment (DME) claims. According to CMS rules, the Medicaid RAC contingency fees cannot exceed the maximum fee paid to Medicare Recovery Auditors, unless a state requests an exception. In June 2011, the Medicare Recovery Auditor contingency fee for DME claims increased from 12.5 percent to 17.5 percent. Therefore, effective March 26, states are authorized to pay Medicaid RACs a contingency fee up to 17.5 percent for DME claims. The contingency fees for all other claims remain the same.

The notice on the Medicaid RAC contingency fee update is available at:

Medicaid Program: Announcement of Medicaid Recovery Audit Contractors (RACs) Contingency Fee Update, 77 Fed. Reg. 37, 11127, 11128. Feb. 24, 2012

About the Author

Richard P. Kusserow established Strategic Management Services, LLC, after retiring from being the DHHS Inspector General, and has assisted over 3,000 health care organizations and entities in developing, implementing and assessing compliance programs.