The Centers for Medicare and Medicaid Services (CMS) recently released data that shows the number of improper payments under Medicare fee-for-service fell by $15 billion from 2016 to present. According to CMS, the decline is the result of a coordinated effort to find the root cause of the improper payments. It is important to note that improper payment rates are not necessarily indicative of, or measures of, fraud. Instead, improper payments are payments that did not meet statutory, regulatory, administrative, or other legally applicable requirements and may be overpayments or underpayments. Additionally, improper payments do not necessarily represent expenses that should not have occurred.
CMS said the improper payment rate in Medicare fee-for-service declined to 6.27% in the 2020 federal fiscal year (FY) that ended in September. The rate is down from 7.25% in FY 2019 and 2020 is the fourth consecutive year that the rate is below 10%. The most recent decline was the result of improvements in two primary areas: home health and skilled nursing facilities. In the home health category, CMS clarified documentation requirements and worked to educate providers, which resulted in a $5.9 billion decline in estimated improper payments from FY 2016 through 2020. Skilled nursing facilities saw a $1 billion decline in estimated improper payments from FY 2019 to 2020.
While CMS is proud of the movement that has happened in reducing improper payments, the agency is “not satisfied and more work needs to be done to achieve increased and consistent reductions in the future by expanding existing initiatives as well as innovative new processes.” CMS notes that its program integrity strategy “strikes an important balance by preventing improper payments while reducing the administrative burden on legitimate providers and suppliers.”
Medicaid and Children’s Health Insurance Program (CHIP) Improper Payments Reviews Resumed
In another release, CMS also announced that after restarting reviews of improper payments in Medicaid and CHIP in FY 2019, the 2020 Medicaid and CHIP improper payment rates are 21% ($86 billion) and 27% ($4.8 billion), respectively. CMS expects the rates to increase again in FY 2021 as data will continue to be measured under a new eligibility component, after the Obama administration paused these eligibility reviews from FY 2015 to FY 2018.
According to CMS, “Based on the measurement of the first two cycles of states, eligibility errors are mostly due to insufficient documentation to affirmatively verify eligibility according to requirements,” such as states not having a record of the required eligibility data such as income. “CMS is taking steps to ensure that states are working with their eligibility systems vendors to guarantee that every person on the program meets eligibility requirements and states maintain appropriate documentation of their verification process,” the agency said.