HHS agency lowers Medicare payment error rate

The Centers for Medicare and Medicaid Services has said it reduced incorrect payments in fiscal 2008 through more comprehensive education of its providers and by better management, tracking and analysis of claims by CMS contractors. CMS is an agency of the Health and Human Services Department.

The improper payments rate for Medicare fee-for-service (FFS) payments decreased to 3.6 percent, or $10.4 billion, in 2008 from 3.9 percent in 2007. That was an improvement of about $400 million no longer at risk for errors in payments, Kerry Weems, CMS acting administrator, said in a report Nov. 17.

HHS issued the Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) improper payment rates in its annual HHS Agency Financial Report. Agencies work to reduce incorrect payments as part of the Improper Payments Information Act of 2002.

“We are using the most effective information-gathering tools available to help us identify and eliminate improper payments in our efforts to protect the integrity of CMS programs,” Weems said.

Improper payment rates include payments that may have been paid incorrectly and do not necessarily reflect fraud, the report said. For Medicare FFS payments, most improper payments are due to claims for services that were medically unnecessary or incorrectly coded, according to the findings.

CMS also reported for the first time an improper payments rate for the Medicare Advantage program of 10.6 percent, or $6.8 billion, in payments made in calendar 2006. Medicare Advantage lets retirees receive their benefits through private health insurance plans instead of the traditional fee-for-service program.

The rate for Medicare Advantage primarily reflects health plan errors in documenting members’ diagnoses, the report said. Improper payments due to incorrect calculations in that system are routinely resolved and payment adjustments are made and documentation errors improve over time, Weems said.

CMS provided for the first time the fiscal 2007 national composite error rates for Medicaid and SCHIP, he said. The federal government and states contribute to the programs. The Medicaid composite error rate was 10.5 percent, or $32.7 billion of which the federal share was $18.6 billion, and, for SCHIP, the rate was 14.7 percent, or $1.2 billion, with a federal share of $800 million, according to the findings.

The vast majority of Medicaid and SCHIP errors are due to inadequate documentation; providers that either did not submit information to support their fee for service or managed care claims or did not submit additional data when requested, a similar trend seen with Medicare Parts A and B in previous years, Weems said.

The Medicare FFS payment error rate has declined from about 14 percent in 1996 to the 2008 rate of 3.6 percent, the report said. CMS expects the error rates for Medicare Advantage, Medicaid and SCHIP to decline similarly through program maturation and the agency’s use of tools that include statistical sampling, medical reviews and error rate reduction plans, Weems noted.

CMS works with Medicare FFS contractors, health and drug plans and states to ensure payments for treating Medicare, Medicaid and SCHIP beneficiaries are accurate, reflect updated coverage policies and to educate providers on how to avoid errors in areas with high improper payment rates, Weems said.

CMS also is conducting an in-depth evaluation effort to review this year’s Medicare FFS error rate to assure confidence in their accuracy, Weems said. CMS also is developing approaches to report the Medicare Part D drug payments error rate in the future, he said.

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