Error Rate Findings and Results

The Part C Improper Payment Measure (IPM) estimates payment errors at the beneficiary-level for the sample. The sample results are then extrapolated to the broader Part C population subject to risk adjustment to determine the total gross payment error amount. 

The Part C IPM Fiscal Year (FY) 2025 Payment Error Rate Results document provides detailed information about payment error results, overpayments and underpayments, key findings, and discrepant CMS-Hierarchical Condition Category (CMS-HCC). This document is available for download in the "Downloads" section.

Key Terms

CMS Hierarchical Condition Category (CMS-HCC) model – The CMS-HCC model uses more than 9,000 International Classification of Diseases 10th revision, Clinical Modification (ICD-10-CM) codes, which are mapped to condition categories used to estimate costs. The condition categories group diagnoses that are clinically related and have similar predicted cost implications. Hierarchy logic ensures that when a beneficiary has multiple related conditions, only the most severe (and costly) condition in each hierarchy is counted for payment, thus the term Hierarchical Condition Category, or HCC.

End Stage Renal Disease CMS Hierarchical Condition Category (ESRD CMS-HCC) model – Like the general CMS-HCC model, the ESRD CMS-HCC model maps ICD-10-CM codes to hierarchical condition categories. The ESRD CMS-HCC model is structured to more accurately reflect the risks associated with ESRD beneficiaries, particularly as the beneficiary moves from dialysis to transplant, and then to post-transplant functioning graft status.

Discrepant CMS-HCCs – CMS-HCCs that were not confirmed during medical record review. Payment errors result when the medical records did not support the CMS-HCCs for which the Medicare Advantage (MA) Organization received payment.

Gross Improper Payments –The sum of the absolute value of underpayments and total overpayments.

Monetary Loss – A subset of improper payments where the wrong recipient was paid or the correct recipient was paid the wrong amount for Medicare Part C. Specifically, monetary loss results when medical record documentation submitted by the MA Organization does not substantiate a condition for which it received payment. 

Net Dollars in Error – The difference between total overpayments and the absolute value of the total underpayments.

Non-Monetary Loss – The non-monetary loss component of improper payments is comprised of dollar amounts associated with conditions identified during the medical review process that the MA Organization did not submit for payment.

Overpayment – Overpayments occur when there is insufficient documentation to make a payment determination and/ or when the MA Organization submits medical records that do not support the CMS-HCC(s) for which it received payment.

Underpayment – Underpayments occur when the MA Organization submits medical records that support a higher-level CMS-HCC payment than the original CMS-HCC submitted for payment.