Medicare FFS improper payment rate falls

The improper payment rate in Medicare fee-for-service (FFS) fell to its lowest rate since 2010, according to CMS. However, there were still an estimated $28.9 billion in improper payments made in 2019, down $7 billion from 2017.

The agency heavily championed President Trump in its announcement of the improper billing rate, noting an October executive order that tasked CMS to take all appropriate efforts to detect and prevent fraud, waste and abuse in the federal health programs. The agency also touted a lower improper payment rate in 2018.

“Every dollar spent inappropriately is one that should have been used to benefit patients,” CMS Administrator Seema Verma said in a statement.

The reduction in the improper payment rate within Medicare FFS largely happened across three Medicare areas. Home health claims corrective actions resulted in a $5.32 billion decrease in estimated improper payments from 2016 to 2019. That drop was thanks to Targeted Probe and Educate for home health agencies as well as policy clarifications.

Within Medicare Part B Services, a $1.82 billion reduction in improper payments was recorded last year due to simplification and clarification of documentation requirements for billing Medicare. Durable medical equipment, prosthetics, orthotics and supplies improper payments decreased $1.29 billion from 2016 to 2019 as a result of “various corrective actions,” according to CMS.

Within Medicaid, the national improper payment estimates for 2019 are 14.9%, or $57.36 billion. By comparison, improper payments in 2017 were $37 billion and $36.2 billion in 2018, according to a report from the Government Accountability Office­­––though the office’s estimates are lower than CMS estimates. The rate for the Children’s Health Insurance Program (CHIP) is 15.8%, or $2.74 billion. In 2017, CMS restarted reviews of determining eligibility for many beneficiaries in CHIP and Medicaid using the Payment Error Rate Measurement (PERM) program, which the previous Obama administration had paused in favor of using the Modified Adjusted Gross Income measurement.

According to CMS, higher PERM rates “are driven by observed eligibility errors,” which can allow individuals to remain enrolled in the federal programs even if they are not eligible. The agency is working with states and their eligibility systems vendors to verify enrollees’ eligibility statuses.

In addition, the agency has a five-pillar program integrity strategy to cut the improper payment rate, including: stopping bad actors; preventing fraud; mitigating emerging programmatic risks; reducing provider burden; and leveraging new technology.

“Our progress on improper payments is historic, but there’s more work to be done,” Verma said. “CMS has taken a multifaceted approach that includes provider enrollment and screening standards to keep bad actors out of the program, enforcement against bad actors, provider education on our rules and requirements, and advanced data analytics to stop improper payments before they happen. These initiatives strike an important balance between preventing improper payments and reducing the administrative burden on legitimate providers and suppliers.”