Advocacy Group Releases Analysis of Current State of the RAC Program

March 9, 2016

CONTACT: Kristin Walter
(202) 898-0995

Advocacy Group Releases Analysis of Current State of the RAC Program

Washington, D.C.– Today, the Council for Medicare Integrity (CMI) released a trend report reviewing and summarizing the current state of the Recovery Audit Contractor (RAC) Program. The analysis looks at:

  • Updates on the Appeals Process: The Office of Medicare Hearings and Appeals (OMHA) has reported that the majority of FY2015 appeals came from traditional workloads, not RAC denials. RAC appeals made up only 19 percent of all appeals filed last year. New estimates show that providers are still filing appeals at rapid rates despite the Centers for Medicare and Medicaid Services (CMS) settlement offer, with appeals cases predicted to surpass 1 million by the end of the fiscal year. OMHA also recently shared that settlement cases will be counted as dismissals within the data.
  • What Issues RACs Can Currently Review: RACs currently review less than 350 Medicare billing issues, down from the over 800 CMS-approved issues that RACs were able to review when the program was working at full capacity. The analysis also delves into a discussion of the top-five CMS-approved billing issues that contribute most to Medicare waste, and provides examples of egregious errors within Medicare billing, such as services provided to a patient after the patient’s death.
  • Changes to Additional Documentation Request (ADR) Limits: Current RAC contracts have been modified to reduce the ADR limit on inpatient claims to just 0.5 percent starting January, 2016 – a 75 percent reduction from previous limits. This now means that 99.5 percent of inpatient Medicare claims will not be reviewed for accurate billing – which is concerning due to the high rate of improper inpatient billing within the program. As a part of the new ADR limit policy a new “good” actor/”bad” actor program has been added in which providers who consistently bill properly will be rewarded with reduced document request limits, and providers who consistently bill improperly will be subject to higher ADR limits.
  • Reductions in RAC Recoveries Despite Sky High Billing Error Rates: According to a 2015 CMS Report to Congress, RACs recovered $2,394,846,151 in overpayments, a 35-percent decrease compared to the year prior due to the agency’s decision to scale back the RAC Program. CMS also reported that the Medicare Fee-For-Service program improperly paid out $43.3 billion – or 12.1 percent of payments – to Medicare providers in 2015.

The CMI report also reviews recently released trend data that, when coupled together, drives additional concerns regarding the future of Medicare:

  • Medicare Trustees Projection: In July 2015, the Medicare Trustees projected the Medicare Hospital Insurance (HI) Trust Fund would be bankrupt by 2030. The report states that in order to sustain the obligations of the Trust Fund for the next 75 years, the Fund needs an additional $3 trillion, beginning in 2015.
  • Congressional Budget Office Projection: In January 2016, the Congressional Budget Office projected that the Medicare HI Trust Fund would be insolvent in 2026, four years before the Medicare Trustees’ projection.
  • Avalere Health Prediction: Avalere Health estimated that if CMS continues the current scaled-back state of the RAC Program over the next decade, federal spending will be $47 billion higher from 2016 to 2025.

Congress created the RAC Program to identify and recover improper Medicare payments. Since the program began, RACs have recovered more than $10 billion in improper payments while reviewing fewer than 2 percent of all Medicare claims – compared to commercial audits, often for the same providers, where recovery auditors are allowed to review up to 100 percent of claims. In early 2014, the RAC Program was temporarily paused due to pressure from the hospital industry – which resists auditing of their billing practices – leaving billions of improperly billed taxpayer dollars unrecovered. Independent third-party validators hired by CMS have shown that Recovery Auditors are highly accurate in their reviews, with an average 96 percent accuracy rate.

“There’s no denying that the accomplishments of the RAC Program are very impressive, especially in light of the provider community’s intensive efforts to scale back the program,” said Kristin Walter, spokesperson for the Council. “Even with limitations, more than $10 billion has been returned to the Trust Fund, extending the life of the Medicare program by two years. If the RAC Program was running at full capacity, imagine the progress we could make in returning wasted taxpayer dollars to the Trust Fund – pushing back the currently calculated insolvency date, making government spending more efficient and ultimately, ensuring that Medicare is there in the future for the millions of Americans who rely upon it.”

For more information, please visit:www.medicareintegrity.org

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About the Council for Medicare Integrity
The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.

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