Don't Use SGR Patch to Meddle with RAC Program: | Council For Citizens Against Government Waste

Don't Use SGR Patch to Meddle with RAC Program:

February 12, 2015

Dear Member of Congress,

Since it was implemented nationwide in January 2010, the Recovery Audit Contractor (RAC) program has been efficient and effective, returning more than $9.7 billion 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.

Even though Congress has passed two improper payments improvement bills since 2010, demonstrating strong bipartisan support to get them under control, the House extended the CMS suspension of RAC audits as part of a bill to pass a temporary patch to Medicare’s sustainable growth rate (SGR).  The SGR patch must be extended on or before March 31, 2015.  On behalf of the millions of members and supporters of the organizations listed below, I urge you to remove any suspension of the RAC program from the SGR patch bill or any other legislation. 

The CMS suspensions are bewildering in light of the RACs’ proven track record of recovering billions of dollars for taxpayers and the fiscally unsustainable Medicare Trust Fund.  The RAC program helped lead to a reduction in Medicare improper payments, which dropped from 10.8 percent in fiscal year (FY) 2009 to 8.5 percent in FY 2012.  However, since the RACs were sidelined by CMS, The Department of Health and Human Services reports that improper payments have risen to 12.7 percent in FY 2014, which equates to $46 billion. 

RACs operate under stringent CMS rules that permit audits of only 2 percent of claims, all of which must be pre-approved by CMS.  RACs have an average accuracy rate of 96 percent.  Criticism of the RACs by hospitals and other providers are both overblown and inaccurate.

According to the 2014 Medicare Trustees report, Medicare spent $7.1 billion more than it received in income in 2013.  The Trustees’ FY 2013 Report to Congress on the RAC program stated that it collected $3.65 billion.  Only $57.6 million of that amount, or 1.6 percent, was overturned on appeal.  The Trustees called the RAC program “an important initiative in CMS’s goal to reduce improper payments and pay claims accurately.”

We urge you to help prevent the enactment of any further impediments to the RAC program by calling for its suspension to be removed from the SGR patch bill when it is considered by the House.  It does not make sense for the most effective and successful tool taxpayers have ever had to reduce wasteful spending in Medicare to be nullified at the same time that there is overwhelming bipartisan support to cut the amount of improper payments across the government. 


Tom Schatz

President, Council for Citizens Against Government Waste

Pete Sepp

President, National Taxpayers Union  

David Williams

President, Taxpayers Protection Alliance

Jim Martin

President, 60 Plus

Penny Nance

Concerned Women for America Legislative Action Committee

Jenny Beth Martin

Tea Party Patriots, Co-Founder

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