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FY2016 RAC Report to Congress: Constraints on the RAC program cause Medicare improper payment recoveries to stall

FY2016 RAC Report to Congress:

Constraints on the RAC program cause Medicare

 improper payment recoveries to stall

Washington, D.C. – September 19, 2018 – The Centers for Medicare and Medicaid Services (CMS) have released the fiscal year 2016 Medicare Fee-For-Service (FFS) Recovery Audit Contractor (RAC) Program annual report to Congress. The RAC Program was mandated by Congress as a safeguard to review provider and supplier Medicare claims on a post-payment basis to identify and correct improper payments, ensuring that program funds are spent efficiently and effectively according to policy.

The FY2016 report shares that RACs identified improper payments in 380,229 claims, resulting in $473.92 million in improper payments being corrected – a small increase over FY2015 corrections totaling $440.69 million.

The small number of recoveries are due to new Additional Documentation Request (ADR) limits that have significantly scaled back RAC audits, only allowing 0.5 percent of a specific subset of Medicare claims to be reviewed for billing accuracy.

“Recently, CMS Administrator Seema Verma shared concerns that the Medicare program reviews less than three-tenths of one percent of the nearly 1.5 billion claims paid each year,” said Kristin Walter, spokesperson for The Council for Medicare Integrity. “This lack of oversight is taking place at a time when the program is losing approximately $40 billion per year due to preventable billing mistakes. The vital billing oversight provided by the RAC Program continues to be severely hampered by an ADR limit that allows 99.5 percent of Medicare FFS claims to be paid without review – resulting in the second year in a row that less than 1 percent of the improper payments identified by independent Comprehensive Error Rate Testing (CERT) were recovered.”

The CMS report also shares:

  • Recovery Audit Contractors are extremely accurate – the independent Recovery Audit Validation Contractor (RVC) determined that RACs have an average accuracy score of 96 percent.
  • The RAC Program has a strong Return on Investment(ROI) – the RAC Program’s ROI was $4.57:1, a significant increase compared to the ROI for FY2015 of $2.48:1.
  • The RAC Program prevents future improper payments. RACs successfully identify billing vulnerabilities that allow CMS to implement new corrective actions that prevent future billing errors.
  • RAC Program enhancements reduce provider burden. Changes to the RAC program implemented in 2015 significantly reduced provider burden, including the turnaround times for reviews, discussion period wait times, and increased transparency into the process.

The RAC Program was created by Congress to review post-payment Medicare claims, identify and correct improper payments and increase the longevity of the Medicare Trust Funds by recovering the funds improperly paid to providers and suppliers. To date, RACs have returned nearly $11 billion in misbillings to the Medicare Trust Funds, and according to Senator Claire McCaskill, have extended the life of the Medicare program by two full years.

Unfortunately, Medicare Trustees recently reported that with increasing levels of beneficiaries entering the program, rising healthcare costs and rampant improper payments, the Medicare inpatient Trust Fund (Part A) will only be fully funded until 2026. After that, Medicare Part A will need to reduce coverage for hospital care compared to what’s covered today.

“It’s more important than ever that Medicare billing oversight be made a priority to make every program dollar work for beneficiaries. We must expand the RAC program to review more claims on a post-payment basis and we ask Congress to give CMS the authority to begin RAC prepayment claim reviews to evaluate and correct claims before they are paid in error,” said Walter. “We urge lawmakers to continue their support of the RAC program as a Medicare solvency safeguard ensuring future healthcare coverage for the millions of retirees and disabled individuals who rely on these critical benefits each day.”

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