Take RAC off the rack, end Obama #amnesty for Medicare fraud

Capitol Hill conservatives are scratching their heads wondering why Republican leaders refuse to address the #amnesty President Barack Obama granted Medicare fraudsters?


In what was billed as a temporary halt, in February the president suspended the Recovery Audit Contractor program, which in fiscal year 2013 clawed back $3.75 billion back into the Medicare Trust Fund by correcting more than 1.5 million claims, according the a Centers for Medicare and Medicaid Services report released June 2013.

The temporary halt is looking like a permanent shelving.

Let that sink in. There is a program that puts $3.75 billion back into Medicare, a program on track to go bankrupt in 10 years, and the Obama administration turned it off.

Put another way, Obama found a way to put $3.75 billion in the pockets of the hospitals.

The RAC program began in 2003 as a pilot program in Florida, New York and California and those three states in 2013 represent one-third of the collections, Florida: $290 million; New York: $309 million and California: $535 million.

At the other end of the scale, the territory of  the Northern Mariana Islands totaled $196 in collections.

Congress expanded the program in 2006, requiring it in all states by 2010.

The four audit contractors, each with its own region, take a cut from their collections ranging from 9 to 12.5 percent on all payments, except for durable medical equipment claims, where they collect 14 to 17.5 percent.

This example of Obama’s executive action is a personal payback to the American Hospital Association, the Chicago-based trade group representing 5,000 hospitals, clinics and health care providers.

Lobbyists working for AHA cut a deal with the White House in 2009 that traded AHA support for the Patient Protection and Affordable Care Act for liberal considerations for hospitals, such as the coerced collectivization of physicians into hospital managed practice units.


Hospitals have squealed about the RAC program from Day 1. But, as bank robber Willie Sutton might explain: That’s where the fraud is. Roughly 94 percent of the claw back collections are taken from in-patient facilities.

One of the most effective ways they fought back at the RAC program was to flood the system with appeals. In fiscal year 2013, 30 percent of all collections were appealed and 20 percent of those appeals were overturned by administrative law judges.

Today, there are still 460,000 outstanding appeals before administrative law judges. At one point, hospitals were appealing 15,000 claims per week, while judges managing to work through 2,000 per week.

Certainly, there needs to be an administrative surge to clear out the appeals backlog, especially since appeals are supposed to be adjudicated in 90 days.

In the next Congress, AHA lobbyists will pushing for a modified audit regime that will create will give the impression of oversight of the federal government’s most ripped off programs.

How about Congress insisting that the president faithfully execute the law already on the books—yeah, that one that turns a $3.75 billion profit for Medicare.

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