Congress needs to do something about improper Medicare billing practices
The Medicare Trustees have released a new report predicting that the inpatient Trust Fund will soon begin paying out more in benefits than it collects in payroll taxes from American paychecks. Medicare Part A will only be able to manage this financial gap until 2026, after that, the program will have no choice but to scale back inpatient hospital coverage — adding more out-of-pocket burden on seniors.
The trustees report calls on Congress and the executive branch to work “with a sense of urgency to address the depletion of the HI trust fund” and the projected growth in Medicare expenditures.
Despite Medicare’s vital role in the health and economic security of American seniors, providers incorrectly bill the program for services that are either not medically necessary, lack the proper documentation or are coded improperly contrary to Medicare policy, draining an extra $40 billion from the program each year.
In 2009, Congress mandated the creation of a program that’s proven to help significantly reduce annual Medicare improper spending. The Recovery Audit Contractor (RAC) program reviews Medicare claims, identifies billing errors and returns improperly spent funds back to the program.
To date, recovery auditors have successfully returned more than $10 billion back to the Medicare Trust Fund and are credited with extending the financial solvency of the Medicare program by two full years, all while reviewing a very small fraction of claims on a post-payment basis.
Unfortunately, the RAC program is significantly scaled back due to provider criticism. As a result, 99.5 percent of Medicare Fee for Service claims are paid without review for billing accuracy and the recovery of improper payments has essentially been brought to a standstill.
With the Medicare Trustees new predictions, lawmakers have a renewed responsibility to ensure Medicare is spending every tax dollar as efficiently and effectively as possible. The significant scale back of the RAC program over the past few years has caused us to lose the ground we had previously gained in protecting Medicare resources.
To extend the life of the Medicare program, we must again expand post-payment claim reviews and add a new layer of financial protection by also reviewing Medicare claims for billing accuracy before they are paid. RAC prepayment claim reviews are tested and proven to be very successful in preventing vital resources from leaving the program in error in the first place.
In fiscal 2012, CMS launched a Medicare Prepayment Review Demonstration Project to allow RACs to review certain error prone claims within 11 states before they were paid. The short program was deemed greatly successful, with RACs preventing more than $192 million in improper payments from leaving the program in error. Prepay claim reviews were completed accurately and quickly, within just 30 days, significantly reducing the burden providers say they endure via “pay and chase” recovery efforts.
In fact, the Government Accountability Office (GAO) reviewed the results of the Medicare RAC Prepayment Review Demonstration and over the past three years has consistently recommended, both in reports and before Congress that CMS add a permanent RAC prepayment review program within Medicare.
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.”
Given the significant financial pressures facing our federal government and with the health and economic security of nearly 48 million American seniors on the line, Congress must act now to expand Medicare RAC post-payment reviews and authorize CMS to begin reviewing Medicare claims before they are paid to finally put an end to the rampant wasteful spending within the program. A greater focus on billing accuracy will add billions back to Medicare’s bottom line each year and again extend the life of the program.
Kristin Walter is the spokesperson for the The Council for Medicare Integrity, which educates policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.