CCAGW Coalition Letter Supporting Preservation of RAC Program | Council For Citizens Against Government Waste

CCAGW Coalition Letter Supporting Preservation of RAC Program

Letters to Officials

United States Senate

Washington, D.C. 20510  

Dear Senator:  

On behalf of the millions of taxpayers that the undersigned organizations represent, we write with a sense of urgency.  Taxpayers, and especially Medicare beneficiaries, desperately need your commitment to preserve one of the most successful improper payment recovery programs ever enacted into law:  the Recovery Audit Contractor (RAC) program.  

Since its nationwide implementation in January 2010, the RAC program has been efficient and effective, returning billions of dollars to the Medicare Trust Fund.  Until the program was hamstrung and certain audits were suspended by the Centers for Medicare and Medicaid Services (CMS) in October 2013, RACs were recovering about $1 billion per quarter.  Indeed, the RAC program fostered a reduction in Medicare improper payments, from 10.8 percent in fiscal year (FY) 2009 to 8.5 percent in FY 2012.  And, because the RACs are compensated on a contingency basis, they cost taxpayers nothing and actually generate revenue to CMS for agency overhead.    

Despite the RACs’ tremendous successes in returning precious dollars to the Medicare Trust Fund, the RAC program continues to be undermined by both CMS and many Members of Congress who have neglected their obligation to protect taxpayers against waste, fraud, abuse, and mismanagement in the payment of Medicare claims.  First, CMS issued sub-regulatory guidance that took effect on October 1, 2013, suspending all RAC audits of short-stay inpatient claims.  That initial 90-day suspension has evolved into a moratorium of over two years and counting.  

More recently, CMS has issued a Technical Direction Letter (TDL) that places a 0.5 percent limit on document requests, well below the statutory limit of 2 percent, rendering the sample size virtually insignificant statistically.  In fact, given the massive number of improper payments identified under the de minimis 2-percent threshold, we believe that the percentage of audits and the associated document request limit should be raised considerably, certainly not lowered to such a trifling level.  

We vigorously oppose these short-sighted and blatantly wasteful policies.  The negative impact to taxpayers and Medicare beneficiaries is already evident:  Comptroller General of the United States Gene Dodaro has testified that, for FY 2014, the Medicare Fee-for-Service error rate has risen from 10.1 percent in FY 2013 to 12.7 percent.  The $45.8 billion in improper payments that CMS reported in 2014 represents the highest level of improper payments among all government programs; however, rather than increase scrutiny on the practices that are driving these losses to the Medicare Trust Fund, CMS is systematically gutting the proven RAC program under pressure from the very providers whose poor business practices are driving widespread improper payments.  Providers, who routinely disseminate false and inaccurate information about the RAC program to members of Congress and the public.  In fact, the RACs are rigorously overseen by CMS and have had independently verified average accuracy ratings of 96 percent each year since 2010.          
This cynical erosion of the RAC program is plain for anyone to see.  During the first three quarters of FY 2014, RACs recovered $1.95 billion in overpayments; however, over the same period in FY 2015, the deleterious impact of the moratorium resulted in recovering only $224.23 million, for an 89 percent drop in returns to the Medicare Trust Fund.  

CMS’s under-the-radar manipulations are effectively nullifying one of the most successful programs that Congress has mandated to curb Medicare fraud, waste, and abuse.  The authority of CMS to unilaterally suspend the program or reduce document requests is unclear.  Instead of facilitating the RAC program’s demise, the agency should, on behalf of its 54 million beneficiaries and taxpayers, be exploring ways to expand the program.    

At a time when the national debt exceeds $18.6 trillion, taxpayers simply cannot afford the unjustified delay of an audit program that is working so well.  It is essential that lawmakers are equipped with accurate information, so we urge you to consider the above facts when making decisions that undermine this highly effective initiative.    


Tom Schatz, President, Council for Citizens Against Government Waste   

Pete Sepp, President, National Taxpayers Union   

Grover Norquist, President, Americans for Tax Reform  

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