Running for office on a pledge to “drain the swamp,” Donald Trump was elected the 45th president. As someone who has created and run many successful businesses, Trump knows the importance of rooting out waste, fraud and abuse in any large enterprise, including government agencies. He also pledged to protect and strengthen Social Security and Medicare, and he has a turn-key opportunity to reduce rampant Medicare fraud that threatens the viability of the program.
The problem is staggering. The Government Accounting Office estimates there is as much as $90 billion in improper Medicare and Medicaid payments to hospitals and health care providers in 2015 alone. Congress created the Recovery Audit Contractors (RACs) program in 2003 to root out waste in the program. The RAC program pays private auditors to review and audit Medicare billing for over-charges or improper charges. The success of the RACs program led to its expansion by Congress in 2006.
The Medicare RACs program was successful, identifying $10 billion in overcharges despite the government allowing only 2 percent of Medicare billing in 2013-2014 to be audited. It is estimated that Medicare was overcharged by more than $44 billion in 2012 alone. The federal website PaymentAccuracy.gov, which tracks Medicare waste, estimates that as much as $58 billion in improper payments were made to hospitals and health care providers in 2014. Clearly, the RACs program has been a great savings to taxpayers, and full implementation to audit all Medicare billing would eliminate most if not nearly all waste and fraud in the program.
Despite the success in the program, lobbyists sought to limit the ability of the government to police payments. The Obama administration limited the program significantly and that cost taxpayers $7 billion, according to a study by Avelere Health. That same study found that fee-for-service Medicare included $45.8 billion (12.7 percent of payments) in improper payments between June 2012 to July 2013, including $44.3 billion in over-payments to health care providers.
Citizens Against Government Waste has strongly supported the RACs program as an effective means to eliminate waste and fraud. The audit contractors are paid from the savings they find in the program billing while none of the cost is borne by taxpayers. This approach is a win-win for taxpayers because it saves federal dollars spent on programs like Medicare while strengthening the program, whose payments are audited, at the same time.
Medicare, which is the primary health insurance for more than 55 million Americans, has become rife with waste, fraud and abuse. Eliminating the fraud and waste is the single most effective way to extend the program, improve its financial integrity, and protect its existence for the millions of Americans who rely on it.
Fully expanding the RACs program to audit all Medicare billing is the best way that President Trump can maximize efforts to reduce fraud and truly save and protect Medicare for all future retired Americans.