Medicare auditors exaggerating predictions of insolvency, providers say

Recovery audit contractors continue to bemoan an audit moratorium and are now saying it is contributing to dire predictions about Medicare program solvency. A RAC group says that General Accountability Office research shows that projected 2014 Medicare overpayments are the single worst example of federal financial waste.

Long-term care operators and other providers say that RACs need to be reined in; providers have been in accord with the audit moratorium and see recent RAC-generated statements as attempts to continue justifying their contracted jobs.

The GAO earlier this month reported to Congress the Medicare program would likely post $60 billion in losses from unrecovered overpayments or improper Medicare payments as a result of a huge backlog, which was fueled by an 18-month audit moratorium that ends March 31. Medicare trustees have predicted the Medicare program will become insolvent by 2030.

On Tuesday, however, the Council for Medicare Integrity, which represents Medicare RACs, blamed the moratorium and other challenges for severely weakening a program that is already on a “fast track to insolvency.” That prompted Ivy Baer, a senior director and regulatory counsel with the Association of American Medical Colleges, to challenge the group's and other's assertions about purported impending Medicare program insolvency. She told Bloomberg News they were “hyperbolic and inconsistent with the facts.”

Baer noted that Medicare trustees in July 2014 predicted the Medicare Hospital Insurance (Part A) Trust Fund would be depleted in 2030 — four years later than the prior year's estimate. Trustees later said the predictions shifted because of the Affordable Care Act and a ramping down in inpatient hospital spending.

The RAC group earlier told Bloomberg News that Medicare billing errors had reached an unprecedented $46 billion per year, and blamed the American Hospital Association for weakening government oversight when it asked CMS to consider more favorable short-stay reimbursements, adding to the ongoing unwelcome specter of audits among all providers, including those in long-term care. The AHA blamed the RAC program for causing onerous administrative burdens on hospitals and other providers.

A large number of hospital industry groups have already asked the government to reform the RAC program, rather than simply tweaking it or throwing more money at fixing an onerous backlog of more than 800,000 Medicare appeals cases.