The U.S. Department of Health and Human Services (HHS) released the final rule for the Medicaid Recovery Audit Contractor (RAC) program last week. The program is projected to save $2.1 billion over the next five years by detecting and correcting improper payments by reviewing claims after the payments have been made.

The program is based on the existing Medicare Recovery Audit Contractor program. The Medicare RAC has already recovered nearly $670 million in 2011, according to the HHS.

The HHS will pay RAC auditors a contingency fee based on recovered improper payments that took place in the previous three years, and thus will be largely self-funded. The Medicaid RAC program goes into effect on January 1, 2012.