[August 13, 2014]

GAO Urges CMS to Streamline Improper Payment Review Process

Today, Citizens Against Government Waste (CAGW) reacted to a July, 2014 Government Accountability Office (GAO) report on the confusion and inefficiencies related to how the Centers for Medicare and Medicaid Services (CMS) manages its post-payment review auditors. The report was requested by a bipartisan group of lawmakers from the Senate and House of Representatives. The Medicare fee-for-service (FFS) program is plagued with the highest percentage of improper payments in the federal government, totaling $36.6 billion in fiscal year (FY) 2013.

In order to reduce improper payments, CMS relies on a patchwork of post-payment review contractors to identify improper payments. The 56-page GAO report evaluated the post-payment review regime and found that oversight and management of its contractors is flawed, hampered by split accountability, incomplete data, and inadequate communication, both between CMS and the contractors, as well as among the contractors themselves. In addition, legislativ language, as well as CMS's own internal rule and regulations, are often conflicting and contradictory.

Only one type of post-payment claims auditor, Recovery Auditing Contractors (RACs), is authorized to recover improper overpayments on behalf of the fiscally-challenged Medicare Trust Fund. RACs perform the vast majority of post-payment reviews; in 2012, RACs performed 1.1 million claims reviews, 83 percent of the claims reviewed that year. RACs have recovered $8 billion for taxpayers since 2009.

"CMS's post-payment review process would look familiar to Franz Kafka," said CAGW Vice President for Policy and Communications Leslie Paige. "Much needs to be done to streamline that process and resolve inconsistencies. However, in so doing, CAGW urges the CMS not to undermine the successful RAC program. RACs consistently score very high marks when it comes to compliance with CMS rules, their contractual obligations, correspondence with providers, as well as independently-verified quality assurance evaluations, all while recovering billions in improper payments from hospitals that have been overbilling taxpayers."

In FY 2013, improper payments for Medicare FFS jumped to 10.1 percent, up from 8.3 percent in FY 2012. Yet, in February 2014, under intense pressure from hospitals, CMS suspended RAC audits until March 31, 2015. Though CMS announced a return to limited RAC audits on August 4, 2014 the program has not been authorized to audit the area of hospital claims it had been reviewing prior to the suspension.

"Even as improper payment rates are rising, CMS is effectively benching its most effective player in the campaign against Medicare improper payments," said Leslie Paige. "The GAO report points to specific, correctable weaknesses in CMS management of its post-payment review auditors. We urge CMS to enact the GAO's recommendations, and also get the RACs fully back to work on behalf of taxpayers."

Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.

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