News Feature | February 13, 2014

CMS Delays Audits Costing Taxpayers Up To $4 Billion

Christine Kern

By Christine Kern, contributing writer


CAGW argues new delay is unnecessary, expensive “oversight holiday” for hospitals

Citizens Against Government Waste (CAGW) has expressed alarm over the decision by CMS to extend the current suspension of recovery audits of medically unnecessary and improper healthcare claims by hospitals for another six months. California Healthline details the decision, noting, “The American Medical Association and the American Hospital Association urged the agency to further delay the rule until Oct. 1, 2014, describing it as ‘fundamentally flawed’ and ‘overly complicated.’”

In the face of this hospital opposition, CMS officials had instituted a three-month moratorium on oversight by recovery auditing contractors (RACs) starting on October 1, 2013, which was then extended to March 31, 2014. According to CAGW, this most recent announcement, “buried on the CMS website,” has now essentially given hospitals a yearlong “oversight holiday,” during which taxpayers and the Medicare Trust Fund will hemorrhage up to $4 billion.

The CAGW press release states Medicare has the highest reported amount of improper payment of any federal program. According to a HHS fiscal year 2013 Agency Financial Report, improper payments in Medicare rose by 12.7 percent, from $44.3 billion in FY 2012 to $49.9 billion in FY 2013. To date since 2009, $4.8 billion has been recovered by RACs, which are currently authorized to audit 2 percent of all Medicare claims, in improper payments to hospitals, a significant portion of which were related to improperly billed in-patient hospital stays. 

 “In FYs 2010 and 2011, RACs identified half of all claims they reviewed as having resulted in improper payments totaling $1.3 billion. In FYs 2010 and 2011, RACs reviewed 2.6 million claims from approximately 292,000 providers. During this period, RACs identified approximately 1.3 million claims with improper payments (50 percent) that totaled nearly $1.3 billion,” according to the HHS Office of Inspector General (OIG).

In a challenge to legislators to control abuse of CMS funds, CAGW President Tom Schatz stated, “Congress should not only buck the intense pressure to gut the RAC program, members should now step in to protect and safeguard the RACs from CMS

“CMS has reported that the RACs have an accuracy rating of between 90.7 and 97.4 percent, which makes it far and away the most successful tool Congress has ever implemented to protect taxpayers and Medicare beneficiaries from rampant improper payments. The suspension of the RACs is a subversion of the will, if not the actual letter, of the law.”

Further, Schatz argued, “At the same time HHS is being required by law to expand the use of RACs, CMS is undercutting the success of the current RAC program and costing taxpayers billions of dollars. While CAGW disagrees that the program needs to be suspended while the guidance is being modified, CMS has nonetheless given itself unilateral control over when the audits restart. By simply delaying its decision-making process, the suspension could continue past one year, and turn into two, three or four years. Each additional day will costing taxpayers nearly $11,000 and give hospitals the unfettered ability to continue to avoid these successful audits.”

Citizens Against Government Waste calls iself nation’s largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.

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