From the CMS's own Feb 2008 press release:

"Approximately 96 percent of the improper payments identified by the RACs in 2007 were overpayments collected from health care providers; the remaining 4 percent were underpayments repaid to health care providers. 

The demonstration program began in California, Florida and New York in 2005 and expanded into Massachusetts, South Carolina, and Arizona in 2007.  The first three states are those states with the largest number of Medicare claims.>>

1.  Though glibly marketed as a measure designed to identify “improper” payments and ensure “accurate” Medicare billing- by attempting to identify equally both under- and overpayments to providers, it is hardly coincidental that fully 96% of the “improper” payments were “overpayments”

2.  RACS incentivized by a cut of the money they recover might explain the gross imbalance between over-and underpayments, but if the true motive was to equally identify “underpayents”, why then structure the program in such a manner to reward RACs with a personal cut of any Medicare money they recover, rather than paying them a salary?

3.  I think it then becomes obvious that,  rather than being designed to identify “improper” payments, and it merely being “more difficult” to identify underpayments,

the true motive for the program-

hidden  transparently behind euphemistic, bureaucratic jargon-

is nothing more than to recover money already paid out from Medicare for services rendered by health care providers to stick back into a Medicare trust fund which is rapidly approaching bankruptcy.

4.  If the above is true, I don’t think it is necessarily being unrealistically cynical or going too far out on a limb to say that CMS officials looking to shore up the fund in such a manner may be “secretly”  hoping that the threat of being audited, heavily penalized financially or even being found criminally liable for overpayments

will probably be more than enough to encourage wide-spread under-coding or underpayment for Medicare services by providers.

Why would the CMS care about losing out on the 10 % Medicare reimbursement cuts to doctors when the threat and fear of prosecution might/will certainly have the same- or better- financial consequence without having to go to the hassle of putting it through a legislative process, into a vote and try to pass it into law and risk having to make politicians stick their neck out for some special interest group or the other?

5.  Probably unnecessary, but I will re-emphasize anyway, that this was merely a “demonstration” or “pilot” project –

with the potential recover Medicare reimbursements for services already rendered on a much grander scale to put back into the fund.

<< The silver lining (if there is one):

*     “If a physician or hospital appeals and has the overpayment determination overturned at any level of the process, the RAC will be required to refund its contingency fee. Before conducting a medical necessity audit, the RACs will be required to receive CMS approval.”>>

Sorry to say it, but this is about as comforting as being found innocent of medical negligence in a frivolous lawsuit- and having profiteering lawyers and plaintiffs “magnanimously cease” from slandering you publicly and robbing you of the time and personal assets lost defending yourself.

 Notice- the vast personal and professional time loss by the innocent victim - and the personal and emotional expense _won’t_ be compensated by the CMS and the unjustly accused provider won’t be “made whole”, but hey- at least the RAC won’t get his/her contingency fee….

<< The article mentions that ~98% of claims were made against hospitals (inpatient/outpatient) and only 1.5% against physicians. With physicians being increasingly employed by hospitals (or in some cases owning hospitals), it’s difficult to tease out exactly how many physicians were actually affected. >>

Being a pilot program however- which is being imminently expanded to the national level after its financial success in a few states, it’s not too far of a stretch to conjecture that those under CMS scrutiny will be likewise expanded from  “some” health care providers” ( ie mostly hospitals) to “all” health care providers- including doctors.

 << I’m confident that (unfortunately!) things like this will continue to drive physicians away from Medicare and the razor-thin margins they offer to provide care to the elderly and disabled. Some physicians already take a loss to see Medicare patients. If the government continues to de-incentivize seeing Medicare patients, then what? I think it will only exacerbate what is already a very real access-to-care problem for many of our parents and grandparents…>>

You’re definitely right about that, Peter- I’m confident of the same, unfortunately, and don’t have anything to add there-