Opportunity for Whistleblowers to Step into the Enforcement Void Left by Hamstrung RAC Program

Could political pressure be behind the recent pull back on the Medicare Recovery Audit Contractor (RAC) program?

The RAC program audits healthcare providers to ensure Medicare payments are accurate. The RACs earn a commission for all non-covered claims that they uncover. From a fiscal standpoint, the RAC program has been a success, returning more than $10 billion to the Medicare trust fund since the program’s inception in 2006, according to the Council for Medicare Integrity. A sizeable percentage of these recoveries have come from claims for unnecessary inpatient stays.

At several congressional hearings (and behind closed doors), industry groups have complained to Congress that hospitals were losing substantial revenues because of the RACs’ short-stay audits. Congress responded in 2014 by encouraging CMS to mothball such RAC audits until the program was thoroughly studied. CMS obliged, preventing RACs from auditing short-term inpatient stays.

The effects were noticeable and immediate, with CMS collecting vastly less money under the RAC program. For example, for the first fiscal quarter which ran from October 2014 through December 2014, CMS reported collecting only $48.3 million under RAC–$768 million less than the same time in 2013.

Fortunately, there is an anti-healthcare fraud weapon that is largely immune to political pressure. Specifically, False Claims Act qui tam actions operate in an apolitical environment, in which fraud cases by statute investigated and prosecuted by the Justice Department. Moreover, when the Justice Department is unable or unwilling to move forward with a qui tam action, the private citizen-whistleblower is incentivized to proceed with the action to the benefit of the public fisc.

More information for whistleblowers is located at the Nolan Auerbach & White website.

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