More Than $10B Returned To Medicare Trust Fund

More work needed to prevent program bankruptcy in 2030

The Centers for Medicare and Medicaid Services (CMS) Medicare Fee-for-Service (FFS) National Recovery Audit (RA) Program reports for the second and third quarters of 2015 show Recovery Audit Contractors (RACs) have returned a total of more than $10B to the Medicare Trust Fund since the program began in 2006. Additionally, RACs have returned more than $800M in underpayments to Medicare providers for services that were initially under billed. RACs audit 2 percent of a Medicare provider’s claims to ensure proper billing according to Medicare policy.

Due to restraints placed on the program, the CMS quarterly reports demonstrate a drastic drop in the recovery of misbilled Medicare funds over the past several quarters. This is especially alarming due to the recent release of the Department of Health and Human Services 2014 Financial Report that shows the rate of improper billing in Medicare trending steadily upward – from 8.6 percent in FY2012 to an all-time high of 12.7 percent in FY2014. A recent Government Accountability Office (GAO) report showed that Medicare improper payments represent the highest rate of financial waste government-wide, with an estimated $46B lost in FY2014 alone.

Due to the youngest of the baby boom generation enrolling in Medicare over the next 15 years and living longer, the cost per individual’s lifetime will double. Add this to the staggering loss of Medicare funds due to provider billing errors and the Medicare Trustees have reported that the Trust Fund will be bankrupt by 2030 – just 15 years from now. The work of Recovery Auditors ensures that taxpayer dollars devoted to Medicare are spent correctly and according to Senator Claire McCaskill (D-MO), their recent work has extended the lifespan of the Medicare Trust Fund by two years.

Even with all these warnings about the future of the program, lobbying from provider groups has put the brakes on the great strides of the RAC program, affording hospitals a 2-year audit holiday on Recovery Audit reviews of short inpatient hospital stay claims, which account for 94 percent of all Medicare improper billing. This moratorium, which began in October 2013, coincides directly with the decline in RAC recoveries (see chart) and is estimated to cost taxpayers $1B per quarter – or $8B in total.

“As important as the Medicare program is to our nation, it’s appalling that the hospital industry is happy to continue to knowingly pocket $46B per year of improperly billed taxpayer dollars that would otherwise extend the life of the program for our most vulnerable citizens, “said Kristin Walter, spokesperson for the Council for Medicare Integrity. “Similarly, it’s surprising that Congress is comfortable with the ongoing waste of billions of taxpayer dollars that fund this program. It’s the responsibility of our nation’s leaders to look out for the best interest of the taxpayer and that means protecting the longevity of Medicare, not the special interest groups that spend millions lobbying in Washington to protect their profits. It’s time to permit Recovery Auditors to work at their full potential to return these wasted funds back to the program where they belong.”

For more information, visit www.medicareintegrity.org.

About the Council for Medicare Integrity
Founded as the American Coalition for Healthcare Claims Integrity in 2009, today the Council for Medicare Integrity is a non-profit organization committed to working toward achieving 100% accuracy in payment claims submitted to public and private sector healthcare payors. The coalition’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help identify and correct improper payments.