Medicare bill would let private auditors block payments before they go out

What does this do?

HR 8804 allows the government to hire private companies called Recovery Audit Contractors, or RACs, to review certain Medicare claims before payment is issued. If a RAC identifies a problem, Medicare can block the payment upfront instead of recovering the money after the fact. The government must establish rules for this program within one year of the bill passing.

Who does it affect?

Doctors, hospitals, and other medical facilities that bill Medicare are directly affected and could face pre-payment reviews and payment delays. Medicare patients and taxpayers are indirectly affected, since the program is funded through taxes and premiums.

Why does it matter?

Shifting some audits to before payment goes out changes how and when healthcare providers receive reimbursement for services. The structure of contractor pay, which is tied to improper spending prevented rather than past overpayments recovered, shapes how aggressively and broadly RACs conduct reviews.

What does it cost, and who pays?

• Funded from Medicare trust funds
• Pay tied to improper spending prevented
• Not paid for past recoveries

Where does it stand?