Private sector best practices can help save Medicare

Today, more than 55 million Americans rely on Medicare for health and financial security as they age. Unfortunately, current beneficiaries, along with those who expect to enroll in the future, are unaware that the healthcare program they have long counted on to support them as they age will look much different in just 10 years – and not for the better.

Medicare Trustees report that at current high spending levels and with the expected influx of new beneficiaries, the program will no longer be able to fully cover the healthcare costs of American seniors after 2028. A Kaiser Family Foundation issue brief details that actuaries estimate Medicare will reduce coverage to 87 percent of what is covered today, relying solely on dwindling payroll deductions to fund Medicare Part A, which covers hospitals, skilled nursing facilities, nursing homes, hospice and home healthcare.

If Part A Medicare coverage decreases, seniors will need to have a plan in place to shoulder more of the financial load associated with their future healthcare needs.

Among the complex healthcare issues stacked for consideration on the desks of Members of Congress, is Medicare's future solvency, which may be bolstered by some simple solutions if we act now. Leveraging a few programmatic tweaks with big impact, we could put an end to the more than $40 billion in improper payments hemorrhaging from Medicare each year.

An improper payment is made when a Medicare provider misbills a claim – often billing to the wrong code, duplicating the submission of a claim or even providing services that are not medically necessary. Over the past four years, more than $166 billion was lost from the program due to very preventable billing mistakes. This calculation does not include financial losses created by intentional Medicare fraud, instead, improper payments are caused solely by sloppy billing practices.

In 2009, Congress mandated a nationwide Recovery Audit Contractor (RAC) Program to review Medicare claims after they are paid to identify improper payments return those resources back to the Medicare Trust Funds. The successful work of Recovery Auditors (RAs) has returned more than $10 billion, all while reviewing just 2 percent of a Medicare provider's claims. The recovery of these vital taxpayer dollars has helped to extend Medicare solvency by two full years.

Despite the dire need to safeguard every Medicare dollar to fend off future coverage cuts, the Centers for Medicare and Medicaid Services (CMS) has now scaled back the RAC program, allowing auditors to review only 0.5 percent of a Medicare provider's claims. This step will send Medicare careening even faster toward slashes in healthcare coverage for seniors.

If you compare the claim auditing practices in the private health insurance industry with those of Medicare, you'll find that private payers require up to 100 percent of claims be reviewed for billing accuracy before they are paid. Private insurers do not tolerate billing errors that negatively impact their bottom line, and Medicare shouldn't either.

It's time that we take a page out of the handbook of the private insurance industry to protect our nation's marquee health program. CMS has the same opportunity to use pre-payment audits to catch billing mistakes before claims are paid. And, adding pre-payment auditing will greatly reduce provider perceived "audit burden" stemming from post-payment audits.

In FY2012, CMS launched a Prepayment Review Demonstration project to have RAs review certain error prone Medicare claims on a pre-payment basis. As a result of this short pilot program reviewing limited issues in only 11 states, RAs prevented more than $192 million in improper payments from ever leaving the Medicare Trust Funds. The program was so successful that the GAO recommended that "CMS should actively seek legislative authority to have RAs conduct prepayment claim reviews."

So, just think about it. Two tweaks to a proven Medicare integrity program and we may actually be able to stave off a looming reduction in health coverage for tens of millions of American seniors. Along with that, providers would experience the same timely review and reimbursement of Medicare claims they do with private insurance companies. And, the Medicare Trust Funds would see a significant infusion of much needed taxpayer resources, that previously were, frankly, just wasted.

We need Congress to step forward to champion the authorization of a prepayment recovery audit program and end the egregious wasteful spending in Medicare. Pair that change with expanded Medicare claims auditing and we could absolutely extend existing coverage levels for millions of current and future Medicare beneficiaries.

Kristin Walter serves as national spokesperson for The Council for Medicare Integrity, a 501(c)(6) non-profit organization that works to educate policymakers and consumers about the importance of Medicare billing accuracy.

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