Avalere Analysis: Continuing The Pause in RAC Program Will Cost Medicare $47 Billion

FOR IMMEDIATE RELEASE                                 
October 27, 2015  
CONTACT: Kristin Walter
(202) 898-0995

Continuing The Pause in RAC Program Will Cost Medicare $47 Billion
Avalere analysis determines federal Medicare spending will significantly increase
over the next 10 years at current RAC recovery levels

Washington, D.C. – Today, an analysis from Avalere Health reveals that the federal government will increase spending on Medicare by $47 billion over the 2016-2025 budget window if the pause in the Recovery Audit Contractor (RAC) Program is permitted to continue.

The analysis entitled, “Estimated Federal Impact of the Medicare Fee-For-Service (FFS) Recovery Audit Program,” details key aspects of the RAC Program and examines trend data from RAC recoveries from FY 2010-2013.

The Avalere analysis reveals:

  • An overall increase in improper payments of $16.1 billion between July 2010 and June 2013.
  • Relatively stable improper payment rates for Part A hospital inpatient claims during this time, however Part A claims other than hospital inpatient increased much faster, causing a substantial growth in improper payments.
  • Home health claims accounted for approximately 50 percent of the increase in improper payments during this time period.
  • The brief increase in RAC recoveries from 2010-2013 reflects CMS ramp-up in RAC review capabilities during this time period.

“Given that the Medicare FFS improper payment rate is at its highest level in history and climbing, this analysis should be a wakeup call for our nation’s leaders who have been tasked to reduce improper payments and protect the Medicare program,” said Kristin Walter, spokesperson for the Council for Medicare Integrity. “The combination of the continued pause of the RAC program, the reduction in the recovery of improper Medicare payments and an increase in Medicare spending is incredibly damaging to the longevity of the Medicare Trust Fund – which at the current rate of spending is predicted to be bankrupt by 2030.”

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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