The Office of Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS) offers a wide array of resources and tools for healthcare providers, patients and various stakeholders on their webpage. Included in this list of resources are a number of Podcasts about important issues the healthcare industry is facing. We previously reported about the significance of healthcare compliance for corporate boards.
Consequently, OIG recently posted a new podcast with Kay Daly, the Assistant Inspector General for Audit Services, who discussed a report about improper payment reporting. Daly explained that “An improper payment is a payment that should not have been because it did not meet program rules, or was an incorrect amount. It includes both overpayments and underpayments.”
“Improper payments are NOT estimates of fraud. While all payments obtained by fraud are improper, NOT all improper payments are fraudulent. Tools that measure improper payments are not designed to detect or measure the amount of fraud in programs such as Medicare,” Daly added.
The Improper Payments Elimination and Recovery Act of 2010 (IPERA), P.L. No. 111-204, requires Offices of Inspector General (OIG) to review and report on agencies’ annual improper payment information included in their Agency Financial Reports (AFR) to determine compliance with the Improper Payments Information Act of 2002 (P.L. No. 107-300) as amended by the IPERA. OIG makes determinations on requirements in the law, for example:
- Did the agency assess the program’s risk level?
- Did it develop improper payment estimates and were the error rates below 10 percent?
- Did it establish and meet targets to reduce improper payments?
- Did the agency publish plans to correct the problems?
As required by the Office of Management and Budget (OMB), agencies must comply in seven key areas, which are (1) publishing an AFR and posting it on the agency Web site, (2) conducting a program-specific risk assessment, (3) developing improper payment estimates for programs and activities identified as risk susceptible, (4) publishing corrective action plans, (5) establishing annual reduction targets for those risk-susceptible programs, (6) reporting gross improper payment rates of less than 10 percent, and (7) reporting on its efforts to recapture improper payments.
In 2012, HHS reported almost $65 billion dollars in improper payments across eight high-risk programs. Daly noted that this is over half of all improper payments reported across the Federal Government. HHS did not report an error rate for the ninth high-risk program, called Temporary Assistance for Needy Families, or TANF, because HHS does not have authority to require states to provide the necessary data. So there is no estimate for that program.
Seven of the eight programs had rates below 10 percent. Medicare Advantage did not. Its improper payment rate was 11.4 percent, which is over $13 billion dollars in estimated improper payments. In response to how OIG and HHS responded to reducing improper payments, Daly noted that four programs: (1) Medicaid, (2) Medicare Prescription Drugs, (3) Head Start, and the (4) Child Care and Development Fund, met their improper payment rate reduction targets.
However, three programs, (1) the Medicare Fee for Service, (2) Medicare Advantage, and (3) Foster Care programs had targets that they did not meet. So the two remaining programs, TANF and the Children’s Health Insurance Program, or CHIP, did not have established targets.
In response to these findings, HHS developed plans for 7 of the 9 programs. For TANF, this requirement did not apply because there was no estimate. HHS did not publish a corrective action plan for CHIP, but reported it was working with states to develop corrective action plans for that program. Ultimately, OIG recommended that HHS should:
- Continue reducing improper payments, and meet its target rates
- Develop error rate reduction targets and corrective action plans for CHIP
- Ensure that amounts used in the computations for reporting improper payments are accurate and complete.