• Cloakroom Confidential: Big Hospital Lobby Strikes Again On ‘Two Midnights’ Rule

    Insiders in Washington understand that lobbyist run this town. For the big hospitals pouring millions of dollars into sophisticated lobbying campaigns, the rules literally do not apply.

    This week, the Obama administration announced it is continuing a “moratorium” on enforcing a rule designed to crack down on Medicare fraud, the latest in a series of years-long delays in implementing it.

    At issue is the so-called “Two-Midnight” rule designed to keep hospitals from gaming Medicare billing rules over whether a patient was “inpatient” or “outpatient” to reap a windfall. Under the rule, patients who doctors don’t anticipate will stay in the hospital for more than two consecutive days (midnights) aren’t eligible for Medicare Part A payments.

    It may sound technical to the layperson, but the sound to hospitals exploiting this loophole was the sound of money — “Ca-Ching!”

    Literally billions of dollars is at stake; Medicare pays an estimated $50 billion annually in fraudulent payments, more money than the gross domestic product of many countries. Now the lobbyist don’t care that you, the taxpayer, are going to pay for this massive increase in cost, because they are paid to conduct outreach for the Crony Capitalists who game the system to use government power to make more money.

    A small program designed to identify fraud initially flagged the improper payments and that program saved billions. Called the Recovery Auditing Contractors (RAC), the government pays auditors a portion of fraudulent payments that are successfully recovered, helping claw back billions in wasteful spending, a drop of sanity into the bucket of government waste.

    RACs found hospitals were exploiting the hospital-stay loophole, and much of the money they helped recoup was from those improper billing patterns. Thus was born the “two-midnight” rule to crack down on the fraud.

    However, since its adoption in 2013, hospitals that benefit from Medicare fraud have waged an all-out assault on the rule, in Congress and at the agency-level, to stop its enforcement.

    The hospitals were originally given a “grace period” to understand the new rule, but that has sense turned into years of delay.

    Now, CMS is delaying it again, creating the impression that although it is officially on the books, it may not ever apply to the hospitals that are raking in money from the loophole.

    The hospital lobby is separately trying to mortally wound the RAC program with a bill that is gaining steam on Capitol Hill. This legislation titled the “Medicare Audit Improvement Act,” (“improvement” here does not mean finding more fraud), already has 55 cosponsors in the House. What money can buy in DC.

    Small-government conservatives must realize this is the battlefield of government spending. The scale of the money is gigantic. The program is scheduled to bankrupt America. And the small efforts to stop fraud – let alone waste – are getting killed left and right by special interests.

    It is ironic that candidates for President promise to balance the budget and attack our $18 trillion in national debt, yet a program that provides massive savings is under attack by lobbyist. This is an issue where the people need to rise up and demand Congress protects the RAC program.

    Cloakroom Confidential

    Cloakroom Confidential was a longtime Capitol Hill staffer and insider who has contacts in the House and Senate at the highest levels.

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