Medicare’s Improper Payment Facepalm Continues Unabated

For Immediate Release Contact: Curtis Kalin 202-467-5318
April 6, 2016  

(Washington, D.C.) – Citizens Against Government Waste (CAGW) today performed a collective facepalm on behalf of taxpayers in reaction to the Center for Medicare and Medicaid Services’ (CMS) release of its Supplementary Appendices for the Medicare Fee-for-Service (FFS) 2015 Improper Payment Report.  Later this year, CMS will publish a more in-depth look at the improper payment rate data for Medicare FFS (FFS), but the appendices already show that the improper payments rate for 2015 was 12.1 percent, up from 8.6 percent five years ago, costing taxpayers $43.3 billion. 

Providers operating in the state of Louisiana led way with the worst improper payment rate in the nation at 19.4 percent, costing taxpayers $1.25 billion.  Providers in California overbilled the Medicare Trust Fund $4.5 billion and had an improper payment rate of 13.6 percent. 

The scourge of improper payments has been a widely recognized problem for the entire federal government for decades.  Medicare and Medicaid are the primary drivers of the phenomenon, according to the Government Accountability Office.  Congress has enacted three improper payment elimination and reduction laws since 2002 to combat the problem, yet the numbers continue to rise. 

To identify and root out improper payments in Medicare FFS, Congress created the Recovery Audit Contracting (RAC) Program in 2009, which enlists the expertise of private-sector auditors to follow the trail of improper payments, identify the sources and patterns of incorrect billing, and recover the money to replenish the Medicare Trust Fund.  RACs are compensated based upon a contingency fee model and cost the taxpayers nothing.  Since it was implemented nationwide in January 2010, the RAC program has returned more than $11.3 billion to the Medicare Trust Fund, before hospitals and other providers who overbill Medicare successfully pressured Congress and their post-payment reviewers at CMS to undermine this very effective anti-government waste tool.  The result of limiting the scope of the RACs’ work has, not surprisingly, been a steep increase in improper payments.  Until the RAC program was undermined and certain audits were suspended by CMS in October 2013, RACs were recovering about $1 billion per quarter, making it the most successful Medicare fraud prevention tool in history, even though it is only allowed by law to review 2 percent of all Medicare FFS. 

CAGW Vice President for Policy and Communications Leslie Paige said, “As improper payments continue to rise, Congress seems content to fiddle while tax dollars burn.  Congress has the tools to roll back the wave of waste in Medicare, but continues to bend to relentless anti-RAC pressure from hospitals and their lobbyists.  Taxpayers deserve more than cozy rhetoric about fighting waste, fraud, and abuse.  It is long past time that Congress put the RACs back to work fighting to stem Medicare’s wasteful tide.” 

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government. 

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