March 26, 2014
U.S. House of Representatives
Washington, D.C.  20515

Dear Representative

You will soon consider legislation concerning the Medicare sustainable growth rate, more commonly known as the “doc fix,” which will expire on March 31, 2014.  Included in this bill is language to extend the Centers for Medicare and Medicaid Services (CMS) two-midnight rule as well as the suspension of the corresponding implementation of the audits of those short-stay inpatient claims.  The two-midnight rule and recovery audits of these short-stay claims have already been delayed multiple times, costing taxpayers billions in foregone savings.  On behalf of the millions of members and supporters of the undersigned groups, we urge you to remove this language from the “doc fix” legislation.
 
On November 1, 2013, CMS issued sub-regulatory guidance suspending all recovery audit contractor (RAC) audits of short-stay inpatient claims for the first three months of 2014.  This change came on the heels of a previous 90-day suspension that took effect from October 1, 2013 through December 31, 2013.  CMS has now extended the suspension of the rule through the end of fiscal year (FY) 2014, and also barred audits for claims submitted prior to October 1, 2013.  Further delays are especially unconscionable in light of the fact that RACs have recovered more than $7 billion in improper Medicare payments since 2009.  Therefore, the language currently incorporated into the “doc fix” legislation is a direct assault on the most successful Medicare oversight tool in the program’s history.  

According to CMS’ FY 2012 annual report to Congress on the RAC program, which was released today, RACs recovered $2.3 billion in improper Medicare payments in FY 2012, up from $797 million in FY 2011.  Furthermore, the report revealed that only 7 percent of RAC improper payment determinations were challenged and later overturned on appeal.  Since 91 percent of improper payments in FY 2012 were from inpatient hospital claims, the continued suspension of audits on these claims will likely cost taxpayers billions of dollars.

An FY 2013 Department of Health and Human Services (HHS) Agency Financial Report, released on December 16, 2013, showed that since CMS began to restrict audits by RACs, improper payments by Medicare rose from $44.3 billion in 2012 to $49.9 billion in 2013.  In its “Medicare Fee-for-Service Recovery Audit Program” report for the fourth quarter of FY 2013, CMS documented that the RAC program recovered $3.7 billion in FY 2013.  

At a time when the national debt exceeds $17.5 trillion, taxpayers simply cannot afford another unjustified delay of the RAC program that has thus far proven to be extremely successful at reducing wasteful spending.  We urge you to act to remove the provisions to further delay the two-midnight rule and recovery audits of these claims in the “doc fix” legislation.  Our organizations will be considering votes on the “doc fix” bill for our 2014 congressional ratings.

Sincerely,

Tom Schatz                                       
President                                          
Council for Citizens Against Government Waste

Pete Sepp
Executive Vice President
National Taxpayers Union