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Medicare FFS Jurisdiction Error Rate Contribution Data

 

Background on Medicare Fee-for-Service (FFS) Improper Payments and Corrective Actions

The Centers for Medicare & Medicaid Services (CMS) is dedicated to continually strengthening and improving the Medicare program, which provides vital services to millions of Americans. We take our responsibility to address program integrity threats and challenges very seriously. 

While improper payments are not necessarily indicative of fraud or abuse, CMS is committed to reducing improper payments in our programs.  CMS uses data from the Comprehensive Error Rate Testing (CERT) program and other sources of information to address improper payments in the Medicare FFS program through various corrective actions.  Each year, the Department of Health and Human Services Agency Financial Report outlines actions the agency will implement to prevent and reduce improper payments.  While some corrective actions have been implemented, others are in the early stages of implementation.  These focused corrective actions will have a larger impact over time as they become integrated into business operations. 

To reduce improper payments within Medicare, CMS is implementing a number of measures that focus on prevention and refined provider education. CMS is taking a widespread approach that includes policy clarifications and simplifications, when appropriate, and more individualized education through smaller probe reviews followed by specific education based on the findings of these reviews. CMS is also committed to exploring opportunities to implement prior authorization and pre-claim review programs. In addition to helping to educate providers and reduce appeals, such programs reduce improper payments.

CMS and the Medicare Administrative Contractors (MACs) aim to help improve provider compliance with Medicare FFS policies and requirements.  Provider compliance is fundamental to reducing improper payment rates. Both CMS and MACs are engaged in a continuing process to identify and execute new and promising practices to improve provider compliance. CMS works closely with all MACs to develop MAC-specific Improper Payment Reduction Strategies in response to the Medicare FFS Improper Payments results.

 

Medicare FFS Jurisdiction Error Rate Contribution Score

CMS’ increased focus on transparency and accountability, as well as ongoing work with MACs to ensure provider compliance with Medicare policies and regulations, will lead to a lower rate of improper payments while transforming our health system to achieve better care, smarter spending, and healthier people.

The following maps display the 2014 and 2015 improper payment rate information for the Medicare FFS program for A/B, Home Health/Hospice, and Durable Medical Equipment (DME) MAC jurisdictions. The jurisdictions listed below are based on the MAC jurisdictions assigned during the 2014 and 2015 Medicare FFS improper payment report periods (i.e., July 1, 2012 – June 30, 2013, and July 1, 2013 – June 30, 2014, respectively). 

An Error Rate Contribution Score was assigned to each jurisdiction to reflect two key variables, the jurisdiction’s:

  • Improper payment rate and
  • Share of national improper payments.

To calculate these scores, each jurisdiction was given a ranking of 1-5 based on their performance on these variables, as shown in the charts below. Two improper payment rate scales are used to reflect the difference in improper payment rate ranges for the various types of MACs. Home Health/Hospice and DME MACs utilize one scale, while A/B MACs are scored using a different scale, as noted below.

 

Improper Payment Rate:
Home Health/Hospice and DME MACs

1

0.0% - 9.9%

2

10.0% - 19.9%

3

20.0% - 29.9%

4

30.0% - 39.9%

5

40.0% - 50.0%

 

Improper Payment Rate:
A/B MACs

1

0.0% - 3.9%

2

4.0% - 7.9%

3

8.0% - 11.9%

4

12.0% - 15.9%

5

16.0% and above

  

 

Share of Improper Payments

1

0.0% - 2.9%

2

3.0% - 5.9%

3

6.0% - 8.9%

4

9.0% - 11.9%

5

12.0%  and above

  

The jurisdiction scores for the two variables (improper payment rate and share of improper payments) are multiplied together to develop an Error Rate Contribution Score. 

 

Error Rate Contribution Score

 

Low (0-8)

 

Medium (9-15)

 

High (16-25)

 

 

 

2014 Medicare FFS Improper Payments

(Report Period: July 1, 2012 – June 30, 2013)

 

2014 Home Heath/Hospice MAC Error Rate Contribution Score

2014 Home Health/Hospice MAC Error Rate Contribution Score

 

2014 A/B MAC Error Rate Contribution Score

2014 A/B MAC Error Rate Contribution Score

 

2014 DME MAC Error Rate Contribution Score

2014 DME MAC Error Rate Contribution Score

 

2015 Medicare FFS Improper Payments

(Report Period: July 1, 2013 – June 30, 2014)

 

2015 Home Heath/Hospice MAC Error Rate Contribution Score

2015 Home Health/Hospice MAC Error Rate Contribution Score

 

2015 A/B MAC Error Rate Contribution Score

2015 A/B MAC Error Rate Contribution Score

 

2015 DME MAC Error Rate Contribution Score

2015 DME MAC Error Rate Contribution Score

 

Interpreting the Maps and Data

When reviewing this data, it is important to understand the following:

  • It is important to remember what improper payments are and why they happen. While all payments made as a result of fraud are considered “improper payments,” not all improper payments constitute fraud, and high improper payment rates do not necessarily indicate a high rate of fraud. Rather, most Medicare FFS improper payments resulted from insufficient documentation to determine whether the service or item was medically necessary.  Payments that the CERT program typically cites as improper were for appropriate services or items that were rendered or delivered to an eligible beneficiary but where the provider failed to document something in the medical record as required by Medicare policy.
  • All jurisdictions have varying claims volume and a different mix of provider types, which can significantly affect their respective Error Rate Contribution Scores. For example, in 2015, J11 had the largest Home Health/Hospice (HH/H) workload, which contributed to its having the greatest percentage of Medicare FFS Improper Payments of the four HH/H MACs and ultimately a high Error Rate Contribution Score. Similarly, JH had the largest A/B MAC workload, which contributed to its having the greatest percentage of Medicare FFS Improper Payments for the A/B MACs and, ultimately, a higher Error Rate Contribution Score in 2015.
  • The main driver of the Medicare FFS improper payment rate for the past two years was improper payments for home health services. The Home Health improper payment rates for FY 2014 (payment report period July 1, 2012 – June 30, 2013) and FY 2015 (payment report period July 1, 2013 – June 30, 2014) were 51.4% and 58.9%, respectively, largely due to insufficient documentation errors occurring when face-to-face encounter narratives did not sufficiently support patient eligibility for the service. In its Calendar Year 2015 Home Health Prospective Payment System final rule (79 FR 66031, November 6, 2014), CMS changed the face-to-face encounter requirements for home health episodes beginning on or after January 1, 2015, removing the physician narrative requirement (impacts from this change would begin to be reflected in the FY 2016 improper payment rate). 
  • DME MACs generally have high improper payment rates, but DMEPOS claims represent a small share of total improper payments, thus the DME MACs have medium-to-low Improper Payment Rate Contribution Scores. Due to successes from corrective actions implemented over a 6-year period, including a DMEPOS Accreditation Program, DME MAC onsite visits to large suppliers, DMEPOS competitive bidding, and prior authorization of Power Mobility Devices, the national DMEPOS improper payment rate significantly decreased from 73.8% ($7.2B) in 2010 to 39.9% ($3.2B) in 2015.
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