Electronic Health Records

Suspension of RAC audits could cost Medicare $2 billion

When the Center for Medicare and Medicaid Services (CMS) announced a suspension of Recovery Audit Contractor (RAC) reviews last month, it was only slated to last from October 1, 2013 until January 1, 2014.  This week, however, the CMS website posted an extended suspension, now lasting until March 31, 2014, according to a statement by the American Coalition for Healthcare Claims Integrity (ACHCI). The organization is voicing concerns about the suspension of reviews, which examine short stay inpatient hospital claims.

The CMS Recovery Audit Program, which reviews and corrects hospital billing errors, has successfully recovered more than $7 billion in improper Medicare payments since its start in 2009. This new auditing interruption will amount to an estimated loss of nearly $2 billion for the Medicare Trust Fund–or more, if the delay continues.

“The suspension of audits will cause a staggering loss of recoveries for Medicare,” said coalition spokesperson, Kristin Walter. Congress created the audits to protect Medicare from billing mistakes and overbillings, but with suspension in place improper payments go uncorrected, draining money from the trust fund.

The RAC program had been feeling pressure from the American Hospital Association’s (AHA) recent complaints, seeking to have CMS to weaken the program, despite government data that demonstrates the precision of RAC findings. The RAC has an average accuracy rate of 95 percent, and according to CMS data, America’s hospitals are responsible for 88% of the overbillings to Medicare.

“The Recovery Audit Contractor program is one of the government’s few successful initiatives to identify and recover waste, fraud, and abuse in Fee-for-Service Medicare,” said Thomas Schatz, President of the taxpayer watchdog group Citizens Against Government Waste. “The highly effective RAC oversight program has saved billions of taxpayer dollars and helped to extend the life of the Medicare Trust Fund.”

The group is urging CMS to reconsider the suspension, adding, “It is the responsibility of hospitals to ensure they are providing proper care to patients while fully complying with Medicare billing policies.”

Read the complete statement here.

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