‘Oversight Holiday’ Drives RAC Recoveries to Lowest Level In Program History

March 10, 2015

CONTACT: Kristin Walter
(202) 898-0995


‘Oversight Holiday’ Drives RAC Recoveries to Lowest Level In Program History
While GAO Reports Provider Inappropriate Medicare Billing Highest in History

Washington, D.C. – The Centers for Medicare and Medicaid Services (CMS) Medicare Fee-for-Service National Recovery Audit Program report for the first quarter of 2015 shows Recovery Audit Contractors (RACs) recovered $48.25 million in misused Medicare funds between October and December 2014, the lowest rate of improper payment recoveries in the program’s five-year history.

The decline in recoveries coincides with the current 18-month moratorium on Recovery Audit reviews of short inpatient hospital stay claims. These particular claims are found to have the highest incidence of Medicare improper payments overall. In fact, hospitals account for 94 percent of overall Medicare improper payments.

Overpayments Chart

This drastic drop in recoveries, shown by the CMS Quarterly Report, is especially alarming due to the recent release of the Department of Health and Human Services 2014 Financial Report that shows the rate of improper payments in Medicare trending steadily upward – from 8.6 percent to an all-time high of 12.7 percent. In addition, this week the Government Accountability Office (GAO) reported that Medicare improper payments represent the highest rate of financial waste government-wide, with an estimated $60 billion lost in FY2014 alone.

“Due to the sidelining of the RAC program, Medicare is on the fast-track to insolvency. Meanwhile, providers enjoy an 18-month oversight holiday and continue to use their blank check to the Medicare Trust Fund,” said Kristin Walter, spokesperson for the Council for Medicare Integrity. “By allowing a 12.7 percent billing error rate to persist, each day that passes the program is one step closer to disappearing, stranding the more than 50 million Americans who count on the program to be there for them.”

In 2003, Congress mandated the creation of the RAC program to combat rampant waste in Medicare and recover misused taxpayer funds. According to CMS, the RAC program is a valuable tool to reduce improper payments in Medicare. With an average accuracy rating of 96 percent, recovery auditors have recovered more than $9 billion in improper Medicare payments since the program began in 2009, all while reviewing only 2 percent of Medicare claims.

“While the RAC program has had consistently documented success at identifying and returning Medicare overbillings to the Trust Fund, hospitals are aggressively working to abolish Medicare oversight,” said Walter. “CMS has significantly limited the Recovery Auditor’s scope of work as compared to what the agency has approved for review. In addition to short inpatient hospital stays, Durable Medical Equipment is another area notorious for waste, with an error rate of 53 percent. The Council for Medicare Integrity urges lawmakers to allow RACs to continue fulfilling their Congressional mandate, and to help promote a stronger, more efficient healthcare system for all.”

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.

As a 501(c)(6) organization, the Council files IRS Form 990s annually with the IRS as required by law. Copies of these filings and exemption application materials can be obtained by mailing your request to the Secretary at: Council for Medicare Integrity, Attention: Secretary, 9275 W. Russell Road, Suite 100, Las Vegas, Nevada 89148. In your request, please provide your name, address, contact telephone number and a list of documents requested.  Hard copies are subject to a fee of $1.00 for the first page and $.20 per each subsequent page, plus postage, and must be made by check or money order, payable to the Council for Medicare Integrity. Copies will be provided within 30 days from receipt of payment. These documents are also available for public inspection without charge at the Council’s principal office during regular business hours. Please schedule an appointment by contacting the Secretary at the address above.

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