(Washington, D.C.) – Today, Citizens Against Government Waste (CAGW) reacted with optimism and frustration after the release of the agency’s annual report entitled “Recovery Auditing in Medicare For Fiscal Year 2014,” which details the performance of the Recovery Audit Contractor (RAC) program.

RACs “identified and corrected a total of 1,117,057 claims for improper payments that resulted in $2.57 billion dollars in improper payments being corrected.”  The vast majority of corrections were made on overpayments.  The program as a whole returned $1.6 billion to the Medicare Trust Fund in FY 2014. 

Since the RAC program was implemented nationwide in January 2010, it has returned more than $11.3 billion to the Medicare Trust Fund.  While that total is impressive, until the program was stymied and certain audits were suspended by CMS and extended by Congress beginning in October 2013, RACs were recovering $1 billion per quarter, or $4 billion annually, which is 60 percent greater that the FY 2014 figure.

“Despite the severe restrictions on RAC audits and the relentless anti-RAC pressure from hospitals and their lobbyists, the auditors still managed to maintain their historically high and laudable 96 percent average accuracy rating while returning more than one billion dollars to Medicare,” said CAGW Vice President for Policy and Communications Leslie Paige.  “However, far more can and should be done at a time when the Government Accountability Office has reported that improper payments rose by $19 billion, from $105.8 billion in fiscal year (FY) 2013 and to $124.7 billion in FY 2014.  Unfortunately for taxpayers, instead of using every possible tool to cut the amount of Medicare improper payments, CMS officials and members of Congress continue to actively undermine the RAC program.”

In regard to the backlog of appeals over denied claims that developed at CMS’s Office of Medicare Hearings and Appeals, CMS announced on August 29, 2014 that rather than allow administrative law judges to judge the claims on their medical necessity merits, it would short circuit the adjudication process and enter into financial settlements with 1,900 hospitals.  In exchange, hospitals were supposed to drop any pending claims.  To date, the settlement costs have reached $1.3 billion.  However, CMS has not provided data on which hospitals received taxpayer-funded settlements, how many claims each hospital had pending, and what percentage of those claim denials were RAC-related rather than denials from one of CMS’s other post-payment claims auditors. 

Paige said, “Taxpayers deserve more information on Medicare improper payments and the settled claims.  More importantly, Congress and CMS need to put the RAC’s back to work.  Until they do, any rhetoric taxpayers hear about cutting waste and improper payments should be dismissed as hypocritical hyperbole.”

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

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