May 7, 2015
U.S. House of Representatives
Washington, D.C.  20515

Dear Representative,

H.R. 2156, the so-called Medicare Audit Improvement Act of 2015 introduced by Rep. Sam Graves (R-Mo.), must have one of the most mismatched bill titles in recent memory.  The legislation would not only fail to improve Medicare audits, it would also gut the Recovery Audit Contractor (RAC) program, the most successful audit tool Medicare has ever had.  On behalf of the more than one million members and supporters of the Council for Citizens Against Government Waste (CCAGW) and National Taxpayers Union (NTU), we urge you to neither cosponsor nor vote for this legislation.

H.R. 2156 would directly undermine the RAC program, which has recovered $9.7 billion in improper Medicare overpayments payments since the initiative took effect nationwide.  This figure is even more impressive considering that RACs review less than 2 percent of Medicare records from any given provider, according to the Centers for Medicare and Medicaid Services (CMS).  

Among the most injurious provisions of H.R. 2156 are the elimination of the contingency fee payment system and the lowering of payment rates for certain RACs.  Terminating the contingency fee payment system is thoroughly misguided.  Under the current payment structure, RACs operate at no cost to taxpayers, and receive no compensation for decisions that are overturned on appeal.  

In fiscal year (FY) 2013, the last year for which CMS data is available, RAC auditors performed at an average 96.4 percent accuracy rate.  Oversight of the RAC program includes both statutory and CMS regulations that are unique to the RACs and do not apply to other post-payment Medicare reviewers.  These provisions ensure that RACs hew closely to CMS rules when adjudicating claims.

Justification for the draconian changes to the RAC program include widely-repeated but completely false statements that providers win appeals cases against the RACs at the administrative law judge (ALJ) level 70 percent of the time.  However, FY 2013 CMS data, the most recent available, shows that RAC denials are overturned on appeal at the ALJ level only 9.3 percent of the time.    

The second argument is a highly exaggerated claim that the program imposes unsustainable administrative burdens on providers.  RACs audit only 2 percent of claims (as compared to private sector insurers, which are entitled to review 100 percent of claims), the cost of appealing is modest, and RACs are the only post-payment reviewer mandated by law to reimburse providers for the cost of producing additional documents.  

Rather than attacking the messenger and destroying the RAC’s pay-for-performance structure, Congress should instead consider imposing significant financial penalties on Medicare providers who routinely submit erroneous claims.  It is widely known that a very small percentage of providers, “frequent filers,” are responsible for the vast majority of the appeals flooding CMS’s Office of Medicare Hearings and Appeals.   

A March 4, 2015 Government Accountability Office report stated that “For the first time in recent years, the government-wide improper payment estimate significantly increased—to $124.7 billion in FY 2014, up from $105.8 billion in FY 2013.  This increase of almost $19 billion was primarily due to estimates for Medicare, Medicaid, and the Earned Income Tax Credit, which account for over 76 percent of the government-wide estimate.”  In FY 2014, Medicare’s fee-for-service program had an improper payment rate of 12.7 percent, a 50 percent increase over the 8.5 percent rate in FY 2012, which translates into $46 billion in losses.  The increase coincides with the suspension of RAC audits by CMS and Congress.

Any attempts to further weaken the RAC program, as this troubling legislation unfathomably will do, can only invite continued increases in improper payments and damage to the long-term viability of the Medicare Trust Fund, upon which millions of American seniors depend.  All roll call votes on H.R. 2156 will be among those considered in CCAGW’s 2015 Congressional Ratings and will be included in NTU’s annual Rating of Congress.

Sincerely,

Tom Schatz
President, Council for Citizens Against Government Waste

Pete Sepp
President, National Taxpayers Union