Recovery Audit Contractor Program Saves Medicare from Itself

On June 23rd, our friends at Citizens Against Government Waste hosted a panel discussion about the importance of the Recovery Audit Contractor (RAC) program in regard to Medicare. This program is essential to cutting out inefficient methods and money-losing practices of the health care industry.

According to the Centers for Medicare and Medicaid Services (CMS), Medicare has the highest reported amount of improper payments of any federal program, resulting in a payout of $46 billion in 2014. The development of the RAC is an excellent measure to restore and reduce inappropriate expenses of Medicare. Since the establishment of RACs, $9.7 billion has been returned to the Medicare Trust Fund.

However, new RAC examinations have been suspended since late 2013. Leslie Paige, the Vice President of Policy and Communications for Citizens Against Government Waste (CAGW), wrote specifically on this issue in her report “Medicare House of Cards: Bringing Down the RAC Program.” She compares this suspension to the power hungry actions illustrated in the popular TV show, “House of Cards.” Even though RACs only audit up to 2% of a provider’s claims at one given time, hospitals that are affected have strongly opposed such investigative techniques. In spite of the RACs’ success for taxpayers, CMS caved to this outside pressure.  In her report, Paige states that Congress and  CMS are undermining a highly effective anti-government waste tool.

The RAC program is particularly attractive in that it costs taxpayers nothing. This program pays its contractors on a contingency basis. NTU has long supported RAC activities precisely because they eradicate wasteful spending without entailing additional federal outlays. Especially as Medicare trudges relentlessly toward insolvency in 2030, and consumes an increasingly large percentage of federal spending, the RAC program is an essential implement taxpayers need to help constrain growing Medicare spending and waste. Congress should take steps to immediately lift its suspension.

Check out more information about NTU’s former reports on the RAC program here and learn more about how it reduces the burdens created by Medicare’s improper spending.