Medicare Loses Two Years of Life

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CONTACT: Kristin Walter
(202) 898-0995


Medicare Loses Two Years of Life

 Greater Focus on Reducing Improper Payments Could Extend the Life of the Program


Washington, D.C. – A new Medicare Trustees report warns that continued growth in spending has reduced the life of the Medicare Trust Funds by two full years. Last year, the Trustees issued a similar report predicting insolvency for the program by 2030 due to a continued increase in medical costs and enrollment in the program. The new report shares that Medicare will now be broke in 2028.

In addition to the growth in medical costs and the surge in enrollment, rampant improper billing within Medicare is a real threat to the future of the program. The improper payment rate stands at 12.1 percent and has been above the legal error rate threshold, of 10 percent, for the past three consecutive years. During that time, Medicare overpaid hospitals and other healthcare providers $125 billion for services that were unnecessary or billed improperly.

“The Medicare insolvency date continues to trend in the wrong direction,” said Kristin Walter, spokesperson for the Council for Medicare Integrity. “There is a significant long-term shortfall that needs to be addressed to keep the program afloat. The government has great tools at their disposal that could help bolster the solvency of the program, but those tools are used at half capacity. It’s time to stop giving our tax dollars away to line the pockets of hospitals and instead recover them to be used to cover the future healthcare needs of our nation’s seniors.”

Though Medicare is a cornerstone of economic security for seniors, some providers frequently overbill the program for services that are either not medically necessary or coded improperly according to Medicare policy. As a result, in 2006, Congress mandated the creation of the Recovery Audit Contractor (RAC) program to help protect the integrity of Medicare funding. RACs review post-payment Medicare claims; identify areas where improper billing is taking place; correct the claims and request that the overages are paid back to Medicare. The federal government pays nothing up front for RACs to do this work; instead, RACs must be highly accurate in order to get paid.

The RAC program has returned more than $10 billion back to the Medicare Trust Funds and extended its lifetime by two years. Despite this success, recent decisions have reduced Medicare oversight to a barely detectable level.

“As things currently stand, a Medicare provider can bill erroneously 91percent of the time and only have 5 out of every 100 claims reviewed for accuracy. This is appalling when you consider that $43 billion is lost each year due to provider billing mistakes,” said Walter. “We must take a hard look at the special interest groups draining the Trust Funds for their own gain and place greater emphasis on billing accuracy to ensure the program is solvent in the future for the more than 50 million American taxpayers who will rely on it every day.”

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

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