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U.S. Comptroller General Reiterates GAO Recommendation That Medicare Add RAC Prepayment Reviews

Says Medicare is missing the opportunity to protect program solvency.

Washington, D.C. – Recently, while testifying before the House Budget Committee regarding the current scale of government improper payments, the U.S. Comptroller General Gene Dodaro reiterated recommendations that CMS should implement a permanent Recovery Audit Contractor Prepayment Review Program. The Comptroller General said:

We recommended that CMS seek legislative authority to allow RAs to conduct prepayment claim reviews. HHS did not concur with this recommendation, stating that CMS has implemented other programs as part of its efforts to move away from the “pay and chase” process of recovering overpayments. We continue to believe that seeking authority to allow RAs to conduct prepayment reviews is consistent with CMS’s strategy to pay claims properly the first time.”

The GAO initially made this recommendation back in April, 2016 in a report to the Chairman of the Senate Finance Committee entitled, “Claim Review Programs Could Be Improved with Additional Prepayment Reviews and Better Data.” In addition to sharing that prepayment reviews are more cost effective, the GAO stated:

“Although CMS considered the Prepayment Review Demonstration a success, and having the RAs conduct prepayment reviews would align with CMS’s strategy to pay claims properly the first time, the agency has not requested legislative authority to allow the RAs to do so. Accordingly, CMS may be missing an opportunity to better protect Medicare funds and agency resources.”

In FY2012, the Centers for Medicare and Medicaid Services (CMS) launched a three-year Prepayment Review Demonstration project to have RAs review certain error prone Medicare claims before they were paid. As a result of this short pilot program, RAs prevented more than $192 million in improper payments from being erroneously paid out. Due to the success of the demonstration, the GAO recommended that “CMS should actively seek legislative authority to have RAs conduct prepayment claim reviews.”

Unfortunately, Medicare loses more money to improper payments than any other program government-wide. An improper payment is made when a Medicare provider misbills a claim – often billing to the wrong code, duplicating the submission of a claim or even providing services that are not medically necessary. Over the past four years, more than $166 billion has been lost from the Medicare program due to these types of billing mistakes.

Year Medicare FFS CERT

Billing Error Rate

Medicare Improper Payments By Year
FY2013 10.1% $36 billion
FY2014 12.7% $46 billion
FY2015 12.1% $43 billion
FY2016 11.0% $41 billion

Historically, Recovery Auditors (RAs) have reviewed Medicare claims on a post-payment basis to identify improper payments, recover those funds and return them to the Medicare Trust Fund. According to the Medicare Trustees and a new Kaiser Family Foundation issue brief,  actuaries estimate that at current spending levels Medicare will only be able to cover hospital insurance benefits for seniors until 2028. After that, the program will have to reduce coverage to 87 percent of what is covered today, relying solely on dwindling payroll deductions to fund the program.

RAs previously reviewed just 2% of Medicare provider claims and have returned more than $10 billion in improper payments back to the program – extending the life of the Medicare program by two full years. Recently, RAs have been scaled back to review only 0.5% of provider claims – greatly reducing the amount of improper payments that can be identified, leaving billions in taxpayer dollars unrecovered.

“Based on the results of the Prepayment Demonstration project, adding RA reviews of claims before they are paid will save Medicare billions of taxpayer dollars each year and bring the program in line with the same best practices leveraged by commercial insurance companies,” said Kristin Walter, spokesperson for the Council for Medicare Integrity.

“Ultimately, Prepayment Recovery Auditing is the best solution to reduce provider-perceived audit burden and extend the life of this vital healthcare program for all future beneficiaries,” said Walter.

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.

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