Scrutiny sought for repeat offenders on Medicare claims

CMS could greatly reduce improper payments by focusing on this "error-prone" group, says the HHS Office of Inspector General.

By Chris Silva — Posted Nov. 8, 2010

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Medicare administrators have not been using historical error rate data to identify and focus on physicians prone to mistakes when reporting claims, according to a report delivered in October by the Dept. of Health and Human Services Office of Inspector General.

The OIG has targeted the integrity of Medicare payments as one of the top management challenges facing the Centers for Medicare & Medicaid Services.

From fiscal 2005 to 2008, the agency said it located 740 repeat offenders, including physicians and suppliers of medical equipment that had at least one error in each audit year and referred to them as "error-prone providers."

CMS could significantly reduce the incidence of improper payments by focusing on these physicians and suppliers, the OIG said. Specifically, it recommended that CMS:

  • Use available error rate data to identify error-prone physicians and medical equipment suppliers.
  • Require them to identify the root causes of claims errors and develop and implement corrective action plans.
  • Monitor corrective action plans.
  • Share error rate data with contractors, such as recovery audit contractors and quality improvement organizations, to assist in identifying improper payments.

CMS reported four categories of errors: incorrect coding, medically unnecessary services, documentation errors and other errors. The OIG said that those errors, when viewed across the entire Medicare system, account for most of the $44.1 billion in improper payments that CMS reported for fiscal 2005 to 2008.

CMS response

In an Aug. 25 letter to the OIG, CMS Administrator Donald M. Berwick, MD, said that as a result of the recommendations, CMS has taken "aggressive actions to reflect a more complete accounting of Medicare's improper payments."

The agency plans to analyze error rates starting with fiscal 2009 data and share the findings with contractors, Dr. Berwick said. Though there is no existing mechanism for requiring the development of corrective action plans, CMS will determine if it has the statutory authority to implement such a process, he added.

"There are other administrative actions that can be taken, such as probe reviews and individual education for providers that prove to be problematic," Dr. Berwick said. He added that the goal is to reduce improper payments by 50% by 2012.

CMS has used two programs to estimate improper Medicare fee-for-service payments: the Hospital Payment Monitoring Program, under which CMS determines improper payments to inpatient acute care hospitals; and the Comprehensive Error Rate Testing program, where all other claims are analyzed.

The OIG reported that payments to physicians other than those in inpatient acute care hospitals and suppliers of medical equipment accounted for 60% of all Part B payments during the audit period.

In response to the report, the American Medical Association said it has a zero-tolerance policy for health care fraud. The Association noted that it has been working with the Obama administration to crack down on such activities.

At a health care fraud summit hosted this year by HHS and the Justice Dept., the AMA expressed hope that physician identity theft and other problems also would be a focus of the administration.

"Physicians are doing their best to provide high-quality patient care in a fragmented health system," said AMA Board of Trustees Chair Ardis Dee Hoven, MD.

"HHS should target areas where fraud truly occurs to be most effective instead of adding onerous burdens on physicians. Increasing resources for outreach and education to the medical community on anti-fraud initiatives, including a clear set of mechanisms on how to report fraud, should also be a high priority," she said.

The AMA in September launched the Practice Analysis Tools for Healthcare, an online application designed to help physicians prepare for billing and payment audits by health insurers and federal contractors.

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Tracking improper payments

According to the Dept. of Health and Human Services Office of Inspector General, the reported estimates of improper Medicare fee-for-service payments decreased by more than $13 billion between fiscal 1996 and 2008. But because of changes in the medical review process, the estimate of improper payments increased to $24 billion in fiscal 2009.

Fiscal year Improper payment Error rate
1996 $23.8 billion 14.2%
1997 $20.9 billion 11.8%
1998 $14.9 billion 8.4%
1999 $14.5 billion 8.6%
2000 $16.4 billion 9.4%
2001 $16.8 billion 8.8%
2002 $17.1 billion 8.0%
2003 $12.7 billion 6.4%
2004 $21.7 billion 10.1%
2005 $12.1 billion 5.2%
2006 $10.8 billion 4.4%
2007 $10.8 billion 3.9%
2008 $10.4 billion 3.6%

Source: "Centers For Medicare & Medicaid Services' Use Of Medicare Fee-For-Service Error Rate Data To Identify And Focus On Error-Prone Providers" Dept. of Health and Human Services Office of Inspector General, October (link)

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