In January 2010, after a successful six-state, three-year demonstration project, Congress gave the Centers for Medicare and Medicaid Services authority to contract with private-sector recovery audit contractors in order to identify and recover improper payments from providers who submit claims to Medicare under parts A and B.
These auditors are paid on a contingency basis only after they have successfully recovered overpayments and returned them to the Medicare Trust Fund. Between fiscal 2012 and 2014, the recovery audit program returned between $2 and $3 billion to the Medicare Trust Fund annually. Total recoveries since its inception are $11 billion. The law also mandates that CMS collect data on the program’s performance and report it to Congress (and the public) on an annual basis.
The reports provided excellent, in-depth data on the nature of improper payments in general (both over- and under-payments), the identity of providers filing them, (hospitals made up the lion’s share of those improper claims, which makes sense since they also represent the vast majority of Medicare claims), which areas of Medicare claims were most problematic, and how much money the program had recovered and turned back to the Medicare Trust Fund.
Today, members of Congress are standing passively by while providers pocket tens of billions in improper overpayments. Even worse, they have lost interest in getting any of the mandated audit reports to grapple with the scope of the improper payment problem.
The last complete Recovery Audit Program Report to Congress that saw the light of day was the fiscal 2016 report, which was released in the fall of 2018, two years late. Since then, the only snippets of information about these recoveries was the $73 million in FY 2018 mentioned by CMS Administrator Seema Verma in a May 2, 2019 blog post.
Congress and CMS have caved to relentless pressure from hospitals and their state and national trade associations, who aggressively opposed the program (and its authority to claw back money) from its inception. They have quietly permitted the recovery audit program to shrink to a shadow of its former self. The volume of claims that RACs are now permitted to review has been reduced from a high of 2% (meager to begin with, for a $568 billion agency which processes more than one billion claims a year) to a statistically insignificant 0.5%. The claims areas the audit contractors are permitted to review (which CMS must approve in advance) have dropped from 800-plus to just 163. Not surprisingly, the undermining of the program has drastically reduced monetary recoveries to the Trust Fund.
Medicare had $36.2 billion in improper payments in FY 2017; Medicare part A is slated for insolvency by 2026; the deficit and national debt are soaring; Congress could use some fiscal offsets for its nonstop spending habits; and, the Government Accountability Office has had Medicare FFS on its high-risk list since 1990, due to its vulnerability to mismanagement and predation.
Yet hospitals have been granted a holiday from oversight. And Congress has allowed tens of billions in improper payments to continue to hemorrhage out of Medicare. CMS Administrator Seema Verma has publicly praised the recovery audit program, acknowledging its value to taxpayers and Medicare patients, so it’s puzzling that the Trump administration is, in practice, abandoning this efficient and highly successful anti-waste tool.
For taxpayers and Medicare beneficiaries, CMS’s and Congress’ adoption of an “out of sight, out of mind” attitude toward tens of billions lost annually to improper Medicare payments has created an information blackout that’s hastening the bankruptcy of the program. Ultimately, seniors will be forced to pay more out of pocket for vital healthcare services and taxpayers will be forced to contribute much more to keep Medicare solvent.
Leslie K. Paige is vice president of policy and communications for Citizens Against Government Waste.
