Medicare shuts down effective anti-fraud RACs program

Medicare shuts down effective anti-fraud RACs program

Despite the effectiveness of the Recovery Audit Contractors (RAC) program in recovering for taxpayers more than $6.1 billion in improper Medicare payments to health care providers, the administrator running Medicare are drastically scaling back the program. The American Hospital Association and other representatives of the hospital industry have lobbied strongly against the continuation of the RAC program. Scaling back the RAC auditing process, according to a recent Avalere Health study commissioned by the Council for Medicare Integrity, could cost taxpayers $47 billion in the next ten years.

The American Hospital Association alone has spent $33.8 million in lobbying efforts over the last couple years in its effort to gut or eliminate the RAC program. They also have allies on Capitol Hill, as Rep. Sheila Jackson Lee (D-TX) intervenes on behalf of Houston’s Riverside General Hospital, contracted the administrator of the Centers of Medicare and Medicaid Services (CMS), Andrew Slavitt, demanding that investigators ignore the findings of Medicare fraud at the hospital.

Rep. Sam Graves (R-MO), on behalf of the hospital lobby, has introduced a Medicare-fraud-enabling bill questionably titled the “Medicare Audit Improvement Act,” with 47 co-sponsors in the House, that would essentially gut the RAC program almost out of existence. Many of the sponsors of the bill have received donations from representatives of the hospital industry, which if they had their choice, RAC would be closed and Medicare fraud would be rampant as a result.

CMS, which administers Medicare, is giving the hospital lobby their wish by drastically scaling back the RAC program, as illustrated in an October 28 letter to the contractors who conduct the audits. Instead of the previous five percent of claims to Medicare the auditors had been reviewing, this will be reduced to one-quarter of that, or 0.5 percents of claims Medicare pays to hospitals and providers every 45 days. This reduction in auditing is expected to severely limited the effectiveness of the RAC program to root out fraud and improper charges in the $600 billion annually spent on Medicare.

The Wall Street Journal reports that the Medicare agency “is getting a lot of pressure from the provider community to scale back the [audit] program,” said Kristin Walter,spokeswoman representing the auditors’ advocacy group, the Council for Medicare Integrity. “The pressure has been getting results.” Ms. Walter said, describing the portion of claims auditors review under current rules as “a tiny, tiny drop in the bucket.”

In 2013-2014, the RAC program lead to the recovery of more than $6.1 billion, and a total of $9.7 billion since its inception. The federal web site, which tracks Medicare waste, estimates that as much as $58 billion in improper payments was made to hospitals and health care providers in 2014. Clearly, since they have sought to gut the program that is that effective, the hospital lobby would prefer not to lose that revenue. But the effectiveness of the RAC program is a great savings to taxpayers.

The downsizing of the RAC program as outlined in the letter from Medicare would reduce the effectiveness of recovery of improper payments by $47 billion between the fiscal years 2016 to 2025, according to a recent Avelere Health study ordered by the Council for Medicare Integrity. The study calculated that fee-for-service Medicare included $45.8 billion (12.7 percent of payments) in improper payments between June 2012 to July 2013, including $44.3 billion in over-payments to health care providers.

The Council for Citizens Against Government Waste (CAGW), and the National Taxpayers Union, has sent a letter to members of Congress urging them to oppose the Graves bill because it would gut the RAC program. Clearly the program is effective in recovering taxpayer money spent on Medicare payments, as CAGW has praised the RAC program for its effectiveness in achieving savings for taxpayers in Medicare.