Guest Columns

Why is it so easy to ignore Medicare improper payments?

Kristin Walter
Kristin Walter

The Centers for Medicare & Medicaid Services recently released the Fiscal Year 2014 Recovery Auditing (RAC) Report to Congress. Required by the same law establishing the Medicare RAC program, this annual account takes an in-depth look at the amount of money the Medicare Fee-For-Service program loses each year along with how much the Recovery Audit Contractor program returns to the Medicare Trust Fund by identifying and recouping improper payments.

According to the report, recovery auditors corrected more than $2.57 billion in improper payments for FY 2014 – representing 5% of the $46 billion in wasted taxpayer dollars the program lost in a comparable period to fraud, waste and abuse.

The $2.57 billion in improper payments found by recovery auditors was in contrast to the $3.75 billion for FY2013 and was accomplished despite a limitation imposed by CMS that only 2% of a provider's claims are subject to review.  

In 2012, when the program was operating at its full potential, auditors were reviewing as many as 800 issue areas and returning $1 billion in Medicare improper payments per quarter. However, since the RAC program pause over a year ago, auditors have been restricted to looking at fewer than 400 issue areas, including an permanent “audit holiday” for providers on short inpatient hospital stay claims.  

What do we do about the other $46 billion that was paid out improperly? Apparently, we do nothing. We shrug and call it unfortunate waste in government while some Medicare beneficiaries see their premiums rise dramatically and the program hurtles even faster toward insolvency.

Last week, the Washington Post Editorial Board posted an article titled, ”When Government Accidently Spends Too Much, Everyone Pays.” In their piece they opine, “Everyone complains about waste, fraud and abuse, but it is remarkable how bureaucrats and special interests can come up with excuses not to carry out the managerial reforms necessary to eliminate them. The general interest does not have a lobby. It remains true, nevertheless, that every misspent dollar lining an undeserving pocket is a dollar not available for those who need help. That should be the starting point for discussion of this neglected but vital issue.”

The truth is that those wasted dollars are our dollars. Taxpayers fund the Medicare system. We all go about our busy lives, paying into the system and expecting the program to be there when we turn 65. How are we going to feel when we're ready to enroll in the program and our contributions are gone? That's not alarmist rhetoric. The Medicare Trustees have waved a red flag for years cautioning everyone that with the current rate of spending the Medicare Trust Fund will be bankrupt in just 15 years – by the year 2030.

Recently, the Senate Finance Committee turned its attention to discussing government-wide improper payments, which have risen to a shocking $124.7 billion in fiscal year 2014 alone and nearly $1 trillion since the government began tracking improper payments in 2003. In particular, Comptroller General Gene L. Dodaro, head of the Government Accountability Office, told the Senate that the federal government could substantially improve its fiscal situation by cleaning up improper payments in three key areas, including Medicare.

"Federal spending in Medicare and Medicaid is expected to significantly increase, so it is critical that actions are taken to reduce improper payments in these programs," Dodaro told the Senate Finance Committee, also saying that CMS hasn't implemented many of his office's recommendations for cutting improper payments.

There's a lot of talk, but no one is doing anything new to close the waste gap within Medicare. The hospital lobby spends millions on efforts to pressure Congress to keep the status quo and because of that, CMS reports like this come out and no one bats an eyelash over the loss of tens of billions of taxpayer dollars that should be in place to extend the life of our nation's marquee healthcare program.

The RAC program was put in place by Congress to actually make the rubber hit the road on this ongoing problem. CMS directs RACS to zero-in on the particular billing issue areas that produce the most improper Medicare payments. According to this CMS report, 84% of improper payments come from inpatient hospitals, followed by skilled nursing facilities (4%) and vendors of durable medical equipment (2%).

Despite having this proven tool in place to fight improper payments, CMS continues to report declining recoveries due to their reduction in the number of approved issue areas RAC's could review after the program pause coupled with the prohibition of RAC review of short inpatient hospital stay claims, an area with a very high billing error rate. CMS shared that despite these claim review reductions “the Medicare FFS Recovery Audit Program has proven to be a valuable tool to reduce improper payments.”  

Why hold back the RACs from their full potential? It makes no sense.

It's time for all those involved in the Medicare system to stop merely talking about Medicare waste and start taking improper payments more seriously. We need to get recovery auditors back to work on all CMS-approved billing issue areas and spearhead new ways to root out waste to preserve the Medicare program for the more than 50 million people who rely on the program each day.

Kristin Walter is a spokeswoman for the Center for Medicare Integrity.

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