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CMS Gives Recovery Auditing Program High Marks, Saves Medicare Billions
[March 26, 2014]

CMS Gives Recovery Auditing Program High Marks, Saves Medicare Billions

WASHINGTON --(Business Wire)--

Today, the Council for Citizens Against Government Waste (CCAGW) was joined by National Taxpayers Union Executive Vice President Pete Sepp on a letter to members of both the House and Senate expressing strong opposition to language included in legislation to address the Medicare sustainable growth rate, more commonly known as the "doc fix," which is due to expire on March 31, 2014. The language included in the legislation would nullify the Centers for Medicare and Medicaid Service's (CMS) Recovery Auditing Contractors (RAC) program by delaying implementation of the two-midnight rule and, more alarmingly, suspending recovery audits of medically unnecessary and improper healthcare claims through March 31st, 2015.

On November 1, 2013, CMS officials issued sub-regulatory guidance on the rule change and suspended all recovery audit contractor (RAC) post-payment reviews of short-stay inpatient claims for the first three months of 214. This change came on the heels of a previous 90-day suspension that took effect from October 1, 2013 through December 31, 2013. If enacted, the language would ensure that the RAC program would be on hiatus for a total of 18 months. Not only has CMS suspended RACs through the end of the fiscal year, it has also barred RACs from reviewing potential improper claims submitted prior to October 1, 2013, even though the law allows auditors to look back five years.

The inclusion of the RAC suspension language today is ironic given that the CMS finally released its overdue FY 2012 Annual Recovery Audit Contractor Report to Congress, which documents the RACs' monumental record of success in recovering billions in improper payments. Auditors recovered $2.3 billion in erroneous Medicare payments in FY 2012, up from $797.4 million in FY 2011, and the contractors had accuracy scores of between 92 and 97 percent. A December 16, 2013 Department of Health and Human Services (HHS) fiscal year (FY) 2013 Agency Financial Report documented that since CMS began meddling with the RAC program, improper payments in Medicare rose by 12.7 percent, from $44.3 billion in FY 2012 to $49.9 billion in FY 2013, a trend that is certain to continue as long as the suspension goes on. Given that Medicare is plagued with the highest reported amounts of improper payments of any federal program and that RACs have clawed back more than $7 billion in improper payments since 2009 (a significant portion of which were related to improperly billed inpatient hospital stays), it is an outrage that Congress would consider language that damages the program and permits the Medicare Trust Fund to hemorrhage money unnecessarily.

CCAGW President Tom Schatz said, "The CMS FY 2012 report proves beyond a doubt that the RAC program is the most valuable tool taxpayers have ever had to reduce and recover improper payments in Medicare. Yet Congress is bending to the pressure of special interest groups, particularly the hospital associations, to eviscerate this very successful program. At a time when the national debt exceeds $17.5 trillion, the Medicare Trust Fund needs every penny it can save. The anti-RAC language in the 'doc fix' bill is a direct assault on taxpayers and the Medicare Trust Fund."

The Council for 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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