Warnings about Medicare’s future continue to be ignored
The Government Accountability Office has released its 2017 “High Risk List,” which identifies federal agencies and programs vulnerable to fraud, waste, abuse and mismanagement. The list is published every two years at the start of a new Congress, raising the alarm about areas that greatly need attention and redirection.
First designated as “high risk” back in 1990, Medicare has made the GAO list every year since due to “its size, complexity, and susceptibility to mismanagement and improper payments.” According to the new GAO report, Medicare was projected to spend $696 billion to provide health care coverage to 57 million individuals in 2016. The program currently accounts for 3.6 percent of the country’s gross domestic product (GDP) and the Congressional Budget Office predicts that Medicare spending will outpace defense and cost double the amount spent annually on Medicaid, with spending accounting for 17.8 percent of “the approximately $3.9 trillion in federal outlays.”
Medicare is an enormous, complex program struggling to perform due to consistently increasing beneficiaries and health care costs. The CBO predicts the program will spend $1.3 trillion by 2026. With more spending increases on the horizon, Medicare’s share of the GDP is predicted to rise to 5.6 percent by 2040. This will put “increasing pressure on the federal budget,” greatly reducing the amount of funds available for other government programs.
Medicare Trustees have also raised red flags about the program, warning that future spending could be even higher than predicted due to “uncertain” spending predictions. Trustees warn that without cost-reduction measures, Medicare’s share of the GDP could reach 6.2% by 2040 and 9.1% by 2090.
According to a new Kaiser Family Foundation issue brief, Medicare’s actuaries estimate that at current spending levels the program will be able to cover hospital insurance benefits for seniors only until 2028. After that, Medicare will have to reduce coverage to 87% of what is covered today, relying solely on dwindling payroll deductions to fund the program.
To make matters worse, Medicare loses more money to improper payments than any other program government-wide. Improper payments stem from provider billing mistakes – simple coding errors, duplicate billing, up-coding and medical services rendered that were not medically necessary – not from intentional fraud, which is accounted for separately. As a result of this ongoing wasteful spending, Medicare has lost more than $166 billion in taxpayer dollars over the past four years alone – much needed funding that could greatly help prolong the solvency of the program.
Medicare is Congressionally-mandated not to exceed an improper payment rate maximum of 10 percent. Despite this, the Centers for Medicare & Medicaid Services’ Comprehensive Error Rate Testing program has reported that the Medicare billing error rate has remained above that 10 percent maximum for the past four years in a row. While the rate has trended slightly downward from FY2014, it still remains higher than is permitted.
Back in 2009, Congress directed the creation of the nation-wide Recovery Audit Contractor Program as a safety net to review post-payment Medicare claims, identify improper payments and return those resources back to the Medicare Trust Fund. While reviewing just 2 percent of a provider’s Medicare claims, Recovery Auditors have successfully returned more than $10 billion in improper payments back to the program, prolonging its solvency by two full years.
Unfortunately, Medicare providers have successfully pressured CMS to further scale back the 2% review of Medicare claims, asserting they are “burdened” by this small claim review. Interestingly, the same providers easily comply with private insurance auditing practices of up to 100 percent of their submitted claims without complaint.
Recovery Auditors can now only review 0.5% of a Medicare provider’s claims. The program that can best protect Medicare solvency has essentially been put on the shelf, actively preventing the recovery of the more than $40 billion in taxpayer dollars hemorrhaging from the program each year.
In contrast to CMS scaling back the RAC program, the GAO is urging CMS to “actively seek legislative authority to have RAs conduct prepayment claim reviews” – which would add a new protective layer of RA audits before claims are paid out. Based on the results of the RAC Pre-Payment Demonstration Project, adding a new level of RA reviews before claims are paid will save Medicare billions while reducing provider-perceived audit burden.
With the focus of the new Congress and Administration now set so intently on our healthcare system, we must demand that lawmakers stop ignoring the billions of improper payments lost each year. We must end this wasteful federal spending by getting the RACs back to work preventing improper payments and returning lost resources to the Medicare Trust Funds. With these safeguards in place, tax dollars will be spent more efficiently and effectively, ultimately, ensuring that Medicare coverage will be in place to support our nation’s seniors for the decades to come.
Kristin Walter is a spokeswoman for The Council for Medicare Integrity.
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