If we want to cut Medicare spending, let’s stop spending billions on improper payments

Paul Ryan recently shared that this year Congressional Republicans will focus on making significant cuts to America’s entitlement programs in an effort to reduce our nation’s deficit. The main focus of the reforms under discussion are cuts that serve to rein in Medicare spending.

Interestingly, while on the campaign trail, President Trump passionately promised the American people that there would be no cuts to the Medicare, Medicaid or Social Security programs on his watch.

So, is it at all possible for Congressional Republicans to meet their goals of reducing Medicare spending, while keeping President Trump’s pledge to the American people?Yes, and the solution is right in the palms of Congressional hands. In 2009, Congress mandated the creation of a program that has proven to help significantly reduce annual Medicare spending.  More effective use of this demonstrated solution would also prevent increasing the cost burden on beneficiaries and allow Medicare to continue to provide access to current levels of care. The answer is the expansion of the Recovery Audit Contractor (RAC) program.

Medicare spends an extra $40 billion each year due to very preventable billing mistakes made by healthcare providers. Over the past 5 years, Medicare has spent $200 billion on these errors  — a fact that both Congress and the Department of Health & Human Services (HHS) has done little to remedy. An enhanced effort to recover these misspent Medicare dollars, and prevent them from leaving the program in error in the first place, would provide quite a significant reduction in annual Medicare spending.

Congress created the RAC program to do exactly that, review Medicare claims, identify billing errors, and return improperly spent funds back to the program. Unfortunately, provider groups, like the American Hospital Association (AHA) spend millions each year lobbying to pressure Congress and CMS to sideline the RAC program citing imagined financial hardships caused by post-payment claim auditing. These efforts to pressure decision makers have thus far been successful. Providers continue to overbill Medicare, improperly pocket billions from the Medicare budget and enjoy steadily rising profits each year.

These special interests have been allowed to chip away at the effectiveness of Medicare integrity programs — now only 0.5 percent of Medicare claims are even reviewed for billing accuracy – successfully preventing the recovery of billions in misspent Medicare funds.

To put this situation into some perspective, private insurance companies require that nearly 100 percent of provider claims be reviewed for billing accuracy both before and after they are paid.

Interestingly, the same healthcare providers that bill Medicare comply without complaint with the much higher levels of auditing required by private health insurers and consider it a cost of doing business.

With Medicare however, providers aggressively fight even the lowest levels of billing oversight because the Federal government has thus far allowed them great influence and ultimately, permission to retain the revenue generated by over-billing the program. This would never be allowed to occur in the private sector, where the bottom line determines the policy.

If Congressional Republicans want to have a “quick win” in both reducing Medicare spending and keeping President Trump’s promise not to cut Medicare, their best bet is to expand the scope of review within the existing Medicare RAC program and block improperly billed funds from leaving the program in the first place.

To achieve reduced Medicare spending, Congress should require CMS to expand Medicare claim auditing far beyond the mere 0.5 percent of claims authorized for review today. In addition, while RACs currently review claims on a post-payment basis, CMS also has the opportunity to ask Congress to authorize a permanent RAC prepayment review program to catch provider billing errors and correct them before funds are improperly spent.

In fact, the Government Accountability Office (GAO) has twice recommended Congress implement a permanent RAC prepayment review program to prevent improper Medicare spending, but the Department of Health and Human Services (HHS) has thus far declined to move the program forward.

It makes absolutely no sense for Congress to take steps to implement broad Medicare program cuts without first addressing the significant amount of wasteful spending continuing within the program.

Expanding the RAC program to review significantly higher levels of claims both before and after they are paid would not only bring Medicare in line with fiscal best practices, it would also allow Congress to achieve its goal of significantly reducing ongoing program spending without negatively impacting beneficiaries.

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