April 27, 2010

Sen. Carper Highlights Successful Program that Recovered $900 Million in Medicare Overpayments and Identified Additional $303 Million in Medicare Improper Payment Vulnerabilities

Letters to HHS Sec. Sebelius and OMB Director Orszag Urges Increased Utilization of Recovery Audit Program To Curb Waste, Fraud and Abuse Across the Federal Government

WASHINGTON (April 27, 2010) –Today, in letters sent to Health and Human Services Secretary Kathleen Sebelius and Office of Management and Budget Director Peter Orszag, Senator Tom Carper (D-Del.) highlighted the successful implementation of an innovative pilot program –the Recovery Audit Contractors (RACs)– that has been effective in identifying and recovering over $900 million in improper payments in the Medicare system and urged the Administration to expand the program throughout the federal government.

“One of the best ways to curb our growing federal deficit is to reign in waste, fraud and abuse in health care and throughout the federal government,” said Sen. Carper. “In a relatively short amount of time, with a very limited scope, the Recovery Audit Contracting program has identified and recovered a hundreds of millions of dollars for the tax payers. Now that we’ve expanded this program to all aspects of Medicare and Medicaid we can expect those savings to grow and more importantly, we can work to improve our health care system to prevent these improper payments from happening in the first place. We can also harness the Recovery Audit Contracting program to reduce wasteful spending and improve efficiency throughout the federal government and I am eager to work with the Administration to accomplish this important task.”

The RAC pilot program was conducted by the Centers for Medicare and Medicaid from March 2005 through March 2008 and looked at improper payments in Medicare Parts A & B in California, New York, Florida, Massachusetts, and South Carolina. In 2009, Congress made the RAC program for Medicare Parts A & B permanent and expanded it to all 50 states. Sen. Carper authored a provision in the recently enacted health care reform law that would require expanding the use of the RAC program throughout Medicare and Medicaid, representing an important opportunity to save additional taxpayer dollars.

In his letters, Sen. Carper pledged to work with the Administration to successfully implement the RAC program in Medicare and Medicaid and urged the Administration to look at ways to utilize the RAC program throughout the federal government. Sen. Carper cited a recent Government Accountability Office (GAO) report (“Medicare Recovery Audit Contracting: Weaknesses Remain in Addressing Vulnerabilities to Improper Payments, Although Improvements Made to Contractor Oversight – GAO-1—143) that demonstrated the RAC pilot program’s effectiveness in recovering tax payer dollars lost to improper Medicare payments. Even more significant was the report’s finding that the RAC pilot program was successful in identifying a series of vulnerabilities within the Medicare payment system that resulted in $303 million in overpayments. In other words, along with recovering $900 million in overpayments, the pilot program identified specific vulnerabilities that, if addressed, would mean fewer overpayments in the future.

Last year, Sen. Carper introduced legislation, the “Improper Payments Elimination and Recovery Act” (S.1508), which would require federal agencies to more aggressively collect federal dollars lost to waste and fraud by implementing the recovery auditing programs. President Obama announced his support for Sen. Carper’s legislation last month.

A copy of Senator Carper’s letter to United States Health and Human Services Secretary Kathleen Sebelius follows:

April 27, 2010

The Honorable Kathleen Sebelius
Secretary
United States Department of Health and Human Services
Hubert Humphrey Building, Room 416 G
200 Independence Avenue, SW
Washington, DC 20201

Dear Secretary Sebelius:

I realize that the implementation of the health care reform bill has put a lot on your plate, but I would like to bring to your attention a great opportunity to reduce improper payments in the Medicare system.

First, I wish to thank you for your help and support in including the Recovery Audit Contracting provision within the recently-passed health care reform law. I know we both agree that Medicare is too important a program for large-scale overpayments to plague the system. The Recovery Audit Contracting pilot program, an innovative tool in which private companies are hired to identify and recover overpayments to Medicare providers, has led to $900 million in overpayments returned to the trust fund. The provision of the health care law to expand the program to include Medicare Advantage, the Medicare Prescription Drug Program and Medicaid, is sure to bring us even greater success. The sooner the full program is up and running, the sooner we can recover millions of dollars in additional overpayments.

As we both remember from our governor days, innovative partnerships with the private sector can often lead to larger opportunities than expected. The Recovery Audit Contractors have proven to be a valuable tool in not only retrieving overpayments, but also in finding ways to improve the system to avoid future overpayments. The Recovery Audit Contracting pilot program, operating in just a few states, identified dozens of vulnerabilities in the Medicare payment system that can lead to waste and fraud. According to the Centers for Medicare and Medicaid Services (CMS), these vulnerabilities have a value of $303 million.

While CMS has addressed many of the vulnerabilities identified by the Recovery Audit Contractors, more work could be done. For example, according to the Government Accountability Office, dozens of identified vulnerabilities await to be addressed. Also, the newly implemented expansion of the pilot program to the entire county, and the broadening of the program to include all of Medicare and Medicaid, will likely result in uncovering more vulnerabilities. Determining how to adopt appropriate measures to address these vulnerabilities, as well as providing adequate resources to implement necessary changes to the Medicare payment system, is critical to reduce the level of overpayments.

I look forward to working with you to ensure the Recovery Audit Contracting program’s ongoing success, as well as other important steps to improve our health care system and ensure accountability of taxpayer dollars. If you have any questions, please feel free to contact me directly or ask your staff to call Peter Tyler in my subcommittee office at (202) 224-8707.

With best personal regards, I am

Sincerely yours,

Tom Carper

Chairman

Subcommittee on Federal Financial

Management, Government Information,

Federal Services, and International Security

A copy of Senator Carper’s letter to the Office of Management and Budget Director Peter Orszag follows:

April 27, 2010

The Honorable Peter Orszag

Director

The Office of Management and Budget

725 17^th Street, NW

Washington, DC 20503

Dear Director Orszag:

I wish to thank you for your leadership in pressing strong measures to rein in improper payments by the federal government. As we both agree, working with federal agencies to reduce overpayments and other wasteful spending is critical as we tackle the nation’s huge budget problems.

I would like to highlight a great opportunity underway within Medicare to further reduce and recover overpayments. The Medicare Recovery Audit Contractor pilot program, an innovative tool in which private companies are hired to identify and recover overpayments from Medicare “fee for service” providers in a few states, has already resulted in $900 million in overpayments being returned to the trust fund. This success has led to an expansion of the pilot program to encompass the entire nation. In fact, a provision of the recently-passed health care law will expand the program to include Medicare Advantage, the Medicare Prescription Drug Program and Medicaid, allowing us to leverage even greater success.

I look forward to working with you to ensure the success of the Medicare and Medicaid Recovery Audit Contracting program expansion. The sooner the full program is up and running, the sooner we can recover hundreds of millions of dollars more in overpayments.

However, we have an additional opportunity. The Recovery Audit Contractors have shown themselves as a valuable tool in not only retrieving overpayments, but also in finding ways to improve the system to avoid future overpayments. The Recovery Audit Contracting pilot program, operating in just a few states, identified dozens of overpayment vulnerabilities in the Medicare payment system. According to the Centers for Medicare and Medicaid Services (CMS), these vulnerabilities represent $303 million in overpayments. With the expansion of the Recovery Audit Contracting program, the opportunity to identify and eliminate vulnerabilities will only increase.

While CMS has addressed many of the vulnerabilities identified by the Recovery Audit Contractors, more work could be done. For example, according to the Government Accountability Office, dozens of additional vulnerabilities have been identified, but solutions have not been implemented. Also, the recent expansion of the pilot program to the entire county, and the broadening of the program to include all parts of Medicare and Medicaid, will mean that more overpayment vulnerabilities will be uncovered. It is my view that leveraging the work by the Recovery Audit Contractors can continue to produce positive results.

I understand that President Obama signed a Memorandum on March 10^th requiring federal agencies to increase recovery auditing. The Medicare Recovery Audit Contracting success story provides many lessons learned to replicate an effective program. I would like to work with you, along with Health and Human Services Secretary Kathleen Sebelius, to identify ways to ensure that not only the Medicare Recovery Audit Contracting program continues and expands, but other agencies are able to replicate this success.

If you have any questions, please feel free to contact me directly or ask your staff to call Peter Tyler in my subcommittee office at (202) 224-8707.