Open Letter to Congress: Examine Suspension of RAC Program


The American Coalition for Healthcare Claims Integrity today sent the following letter to members of the House Oversight and Government Reform Committee, Senate Homeland Security and Governmental Affairs Committee and Senate Finance Committee. The letter urged lawmakers to investigate CMS’s suspension of the Recovery Audit Contractor (RAC) program, in light of Medicare’s overwhelming volume of waste, fraud and abuse.

The decision by CMS conflicts with the agency’s website, which states that RACs are reviewing claims filed up to three years ago.

Feb. 3, 2014

The Honorable Darrell Issa
Chairman, Committee on Oversight & Government Reform
United States House of Representatives
2347 Rayburn House Office Building
Washington, D.C. 20515-0549

Dear Chairman Issa:

Late on Friday, the Centers for Medicare and Medicaid Services (CMS) further delayed the enforcement of its two-midnight rule policy (CMS-1599-F) by eight months, until Oct. 1, 2014. In tandem with this decision, CMS is also continuing to suspend the majority of Medicare auditing by the Recovery Audit Contractor (RAC) program.

The grave implications of this decision cannot be overstated. For five years, recovery auditors have worked on behalf of taxpayers to weed out waste in Medicare, returning more than $7 billion to the Medicare Trust Fund. In fact, RACs only audit two percent of all Medicare billings, and yet find errors in nearly 50 percent of those records. This additional delay will halt auditing for an entire year, cost the Medicare Trust Fund more than $4 billion in unrecovered funds, threaten Medicare’s long-term solvency and weaken healthcare coverage for the nearly 50 million seniors who rely on this program every day.

Last year, Medicare lost more than $35 billion to waste, fraud and abuse. The willingness of CMS to suspend the most effective Medicare integrity initiative in U.S. history in the face of this astounding volume of waste is unconscionable. And the ability of healthcare officials to forgo congressional approval on a decision impacting the nation’s marquee healthcare program is an alarming development that begs further investigation.

Our coalition urges you to examine these recent developments. In addition, we welcome the opportunity to propose an alternative solution rather than a blanket suspension of improper payment recovery audits. To protect Medicare and give hospitals time to transition to the two-midnight rule, we recommend that auditing be reinstated immediately according to the following guidelines:

  • For Medicare admissions prior to Oct. 1, 2013, RACs will audit according to the old rule, in effect at the time of service.
  • For Medicare admissions between Oct. 1, 2013 and Sept. 30, 2014, RACs will audit according to the old and new two-midnight rule, applying the rule that favors the hospital while still identifying improper payments for the Trust Fund.
  • For Medicare admissions after Oct. 1, 2014, RACs will audit according to the new rule.

This approach would benefit everyone by providing hospitals ample time to educate staff on the rule change, returning $1 billion per quarter back to the Medicare Trust Fund, strengthening coverage for Medicare beneficiaries, and saving billions for American taxpayers.

We urge you to review CMS’s recent policy changes and to allow the RAC program to resume auditing. Despite these unsettling developments, our coalition remains committed to increasing integrity in Medicare, and looks forward to working with you to strengthen our nation’s healthcare system.

Rebecca Reeves Sig

Rebecca Reeves
The American Coalition for Healthcare Claims Integrity


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