When the U.S. Federal Marshal system was founded, its mission was to execute all lawful warrants as officers of the courts. The main association with marshals is a lone, Wild West-style lawman, like Wyatt Earp or Rooster Cogburn, but the program was started by George Washington and continues to this day. Many people still probably associate U.S. Marshals with Tommy Lee Jones ordering a hard-target search of every gas station, residence, warehouse, farmhouse, henhouse, outhouse and doghouse:
Up until 1896, the marshals were paid on a fee service—incentivizing them to carry out the law. A similar system is used today to inspire Recovery Audit Contractors (RACs), but instead of chasing cattle rustlers, they face the much more treacherous task of navigating the federal health care budget.
RACs hold hospitals accountable for overbilling Medicare patients—a huge problem in an industry with as little transparency as health care. As compensation for their good work, auditors receive a small portion of the money they help save.
The RAC program is one of those shockingly effective policies of the Bush administration that didn’t get much attention but helped make government more accountable. After its pilot program from 2005 to 2008, RACs corrected more than $1 billion in improper Medicare payments, according to the Centers for Medicare and Medicaid Services (CMS). As the program has grown, it’s saved about $10 billion in total, $2.57 billion of that in 2014 alone, CMS continued.
Some predict that RACs, if given proper authority, could recover $120 billion in lost Medicare funding per year. Even in D.C., that’s a lot of money. RACs could cut this year’s deficit, $534 billion, by 25 percent. These are not controversial budget cuts that take food out of infants’ mouths or body armor of our warfighters: These are cost savings in programs where the taxpayer is getting ripped off.
And RACs are finally getting the help they need to perform their mission.
After years of stalling, Medicare has finally awarded a few more badges to help the marshals the a nearly three-year delay, Medicare recently awarded all five recovery audit contractor (RAC) contracts to HMS Federal Solutions, Cotiviti Inc. (which received two regions), and Performant Recovery Inc., which will serve as a traditional RAC and focus on durable medical equipment.
The problem inherent to a monopoly is the opportunity for bad actors to gouge consumers. One reason health care is so expensive is many hospitals have a de facto monopoly in their city. Furthermore the government, by design, has no competition, meaning that public-funded health care puts consumers (the taxpayer) at the mercy of two monopolistic entities.
Even if there’s no malice, the opportunity for waste in a program as enormous as Medicare abounds. At $540 billion (15 percent of the federal budget), we spend almost as much money on Medicare as we do our entire national defense (16 percent). Medicare costs almost as much as all of our warfighters’ salaries, aircraft carriers, and everything else to protect us combined.
It’s like a budgetary Wild West.
Saving health dollars and reinvesting them in Medicare is vital to its continuing health, especially given the grim prognosis that the program will be bankrupt by 2028.
During the Obama administration, where health care policy has frequently resembled welfare for insurance companies and large, corporate enterprises, the RAC system has not received the credit it deserves or the authority it needs. One way the Obama administration tried to stop auditors from saving money was ruling that only one in every 200 payments to hospitals could be reviewed—meaning bad actors have only a 0.5 percent chance of ever even being detected. (Private health insurers require as much as 100 percent claim review, because they want to save money, rather than provide kickbacks to cronies.)
Hospitals hate RACs because they force accountability. Powerful hospital chains who can afford top-flight lobbyists and massive campaign contributions have, somehow, bent the Obama Administration’s will against RACs, even as wasteful overpayments have boomed under his watch.
Fortunately, some have helped carry the RAC flag while it’s been under fire from the Obama administration.
Last year Sen. Orrin Hatch (R-Utah) introduced the Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act (S. 2368) to improve the Medicare audit and appeals process. Cosponsored by Sen. Richard Burr (R-NC) and Sen. Ron Wyden (D-Ore.), the bipartisan bill passed the Senate Finance Committee last year but hasn’t moved much since then.
This Congress is over, so the bill would have to be reintroduced next year, but hopefully new leadership in Washington makes this kind of legislation moot.
While the Obama Administration has scolded anyone standing in the way of “free” health care, RACs are helping pay for that health care in the future. If auditors can save Medicare money now, that’s money to help save lives tomorrow. We just need to let them do their jobs.
Saddle up, partner.
