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Forbes: Hospital Industry Raids The Medicare Trust Fund

From Forbes:

Hospital Industry Raids The Medicare Trust Fund

Every year, millions of Americans pay federal taxes to support government programs that provide health, wellness, and other benefits to those who need it most. One would assume that safeguards are in place to ensure that our taxpayer dollars are used appropriately and efficiently. However, a recent Government Accountability Office (GAO) report states that rampant waste exists within the Medicare program. In 2014 alone, Medicare overpaid hospitals and other healthcare providers nearly $60 billion for services that were unnecessary or billed improperly. That’s billion—with a “B.”

Would you allow yourself to be overcharged for your groceries and not ask for a refund? Would you go out to dinner and pay for items on your check that you never ordered? The federal government would, and it is wasting your taxpayer dollars while doing so.

The GAO report states that Medicare has the highest level of improper payments government-wide, which should be unacceptable given the program’s important role as the healthcare safety net for the nation’s seniors and other beneficiaries. Pair that with a recent Medicare Trustee report that says Medicare will go bankrupt in the next 15 years (by 2030). Clearly, Medicare waste needs to be made a higher Congressional priority, or we can bid farewell to a program that we hoped would be there for us when we turn 65.

In 2009, Congress launched a program to provide vital oversight to Medicare, the Recovery Audit Contractor (RAC) program, which leverages the expertise of independent contractors to review post payment Medicare claims and determine if they have been billed according to Medicare policy. Since the RAC program began,these contractors have returned more than $9 billion back to the Medicare Trust Fund while reviewing less than 2% of all Medicare claims. This work to recoup dollars that have been inappropriately billed helps prolong the life of this vital healthcare program.

So, what’s the problem? Congress has benched the RACs, the only program looking out for taxpayer dollars, while Medicare hemorrhages billions due to provider complaints that they are “burdened” by Medicare oversight programs.

In fact, in an effort to game a broken system and retain as much money as possible, whether billed correctly or not, hospitals have spent tens of millions of dollars lobbying Congress to shut down the RAC program, one of the most successful oversight programs in U.S. history. Hospitals most passionately fight against review of Medicare Part A claims, which are directly paid for by taxpayer dollars.

Medicare improper billing runs across a wide spectrum—including everything from simple coding mistakes to outright fraud. For example, providers have inappropriately charged Medicare ten times what it costs to administer a single medication, have billed for care provided after a patient’s death, and also have held patients in the hospital longer than necessary in order to recoup a higher reimbursement rate.

A recent Wall Street Journal story shed light on the problem of financial incentives and their impact on patient care. The story examined how long-term acute-care hospitals typically receive lower reimbursements for what is considered a “short stay.” After the patient is admitted for a particular length of time, his or her Medicare reimbursement payment jumps to a larger lump sum. The article shares that many long-term hospital companies discharge a disproportionate share of patients during the window when they stand to make the most money, a frightening sign that financial incentives in the Medicare system inappropriately influence patient care.

Let’s take a look at the double standard providers use when it comes to their objections to Medicare oversight.

Hospitals cry “burden” due to basic Medicare oversight practices

The Center for Medicare and Medicaid Services (CMS) reports that hospitals account for 94% of overbillings to Medicare. Despite this high instance of financial mismanagement, providers complain that they have to devote additional resources to comply with requests from recovery auditors who examine only 2% of their Medicare claims. Meanwhile, the same providers comply as a course of business with the requirements of private insurance companies that review the majority of submitted claims to ensure that they are medically appropriate.

To distract from the taxpayer funds they are wasting, provider groups insist that RACs are paid unfairly

The law requires that integrity contractors be paid according to standard commercial business practices. The standard practice in the industry requires contractors to be paid according to a contingency fee model where the contractor is paid for performance, only retaining a small portion of their recoveries. This practice is also “budget neutral” since it does not require the federal government to earmark additional funding to oversee Medicare.

Private insurance companies reimburse recovery auditors for their services using this contingency fee model, which is a financial best practice. The recovery auditors are reviewing similar or the same claims from the same hospitals—there is no difference in the way claims are reviewed for the commercial market or Medicare. As an additional safeguard to ensure that RAC’s audit as accurately as possible according to Medicare policy, recovery auditors must return their fee if their claim denial is overturned on appeal—which only happens a low 9.3% of the time. According to the CMS, “this process helps ensure the accuracy of recovery auditors’ reviews.”

In a remarkable industry-wide case of transference, provider groups claim that recovery auditors seek only to make a big profit and, therefore, deny an inappropriate number of claims

CMS reported in October 2014 that RAC reviews are highly accurate, with a 96% accuracy rate for their claim denials and recoveries. Hospitals, however, are notorious for inaccurately billing Medicare, and want to keep our taxpayer dollars that they do not merit. Before you go crying for the hospitals, remember that they comprise a $988 billion industry that in 2012 made $20 billion in profits nationwide.

Even with the documented success of the RAC program, which effectively reduced the rate of improper Medicare payments from 10.8% in 2009 to 8.5% in 2012, the program has remained sidelined for the past year and a half. During this time, the U.S. Department of Health and Human Services reported that improper payments have risen to an all-time high of 12.7% in 2014, which accounts for the GAO’s recent report that Medicare lost nearly $60 billion that year.

It’s time to get the RAC program back on track and reviewing claims at previous levels. Congress shouldn’t allow special-interest groups to get away with profiting from this drain on the Medicare Trust Fund.

 

Read the original article here.

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