2011 MEDICARE ADVANTAGE (PART C) IMPROPER PAYMENT ERROR RATE

For FY 2011, CMS is reporting a Part C composite improper payment rate estimate of 11 percent, based on CY 2009 payments.   This represents a three percentage point reduction from the FY 2010 Part C composite improper payment rate of 14.1 percent. This improvement can be attributed to the Administration’s emphasis on contract-level risk adjustment data validation audits designed to recover overpayments to Part C plans.[1]

The Part C composite improper payment rate estimate presents the combined impact on Part C payments of errors in the Medicare Advantage-Prescription Drug (MARx) payment system and errors in risk scores used to adjust beneficiary-level payments to Part C plans.

·       Medicare Advantage-Prescription Drug (MARx) Payment Error (MPE).  The MPE for Medicare Part C captures prospective payment errors caused by system errors in the transfer/interpretation of source data and calculation errors in the MARx payment system.

·       Risk Adjustment Error (RAE). The RAE estimate captures error in risk adjustment data (clinical diagnosis data) submitted to CMS by plans for risk adjusting payments, based on a national sample of MA beneficiaries.

Beneficiary risk scores are used, by law, to adjust CMS' monthly payment to Medicare Advantage plans by beneficiary health status.  To determine each beneficiary's risk score, plans submit clinical diagnosis data to CMS, which should be reflected in a medical record. The RAE rate reflects payment errors due to diagnoses that were not supported by medical record documentation, as determined during CMS' review of diagnoses for sampled beneficiaries.  Unsupported diagnoses result in changed risk scores and changed payment amounts.

CMS has been reporting a national improper payment rate for the Medicare Advantage (Part C) program for four years, as required by the Improper Payments Information Act of 2002 (IPIA), as amended by the Improper Payment Elimination and Recovery Act of 2010 (IPERA).