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NEW STANDARDS HELPING LOWER MEDICARE IMPROPER PAYMENT RATES FOR 2010

NEW STANDARDS HELPING LOWER MEDICARE IMPROPER PAYMENT RATES FOR 2010
IMPROPER PAYMENT RATE REDUCTIONS ARE PART OF ADMINISTRATION EFFORTS TO ELIMINATE ERRORS AND PREVENT WASTE AND FRAUD IN MEDICARE AND MEDICAID

Following the Obama Administration’s work to more accurately account for improper payments and a renewed focus on fighting waste, fraud and abuse, the 2010 error rate for Medicare claims declined in 2010 and is on track for a 50 percent reduction by 2012. The error rate for Medicare Advantage also declined and a new component measure was developed and reported for the Part D program. The Centers for Medicare & Medicaid Services (CMS) also reported today the first three-year review of the Medicaid error rate.

 

“The Administration is committed to strengthening Medicare, Medicaid and the Children’s Health Insurance Program and we’re working hard to fight fraud, protect taxpayer dollars and drive the improper payment rate down,” said Health and Human Services Secretary Kathleen Sebelius. “Last year we changed how we calculate the error rate in fee-for-service Medicare to more accurately reflect improper payments and enhanced our efforts to fight waste, fraud and abuse. This year’s lower rate reflects those changes and our focus on protecting Medicare.”

 

The Medicare and Medicaid improper payment rates are issued annually as part of the U.S. Department of Health and Human Services (HHS) Agency Financial Report. The Medicare fee-for-service error rate dropped to 10.5 percent, or $34.3 billion in estimated improper claims payments. The 2009 error rate was 12.4 percent, or $35.4 billion.

 

In addition, for 2010:

 

·        The Medicare Advantage, or Part C, error rate, based on payment year 2008, is 14.1 percent, or $13.6 billion, a reduction from last year’s rate of 15.4 percent, or $12.0 billion.

 

·        CMS has made strides in developing a Medicare Part D composite error estimate based on a series of payment error sources. This year, an additional measure was developed and a total of four component error estimates are being reported. CMS plans to report a composite error estimate for Part D beginning in FY 2011. The four components are: 1) a Part D payment system error of 0.1 percent, 2) a low-income subsidy payment error of 0.1 percent, 3) payment error related to Medicaid status for dual eligible Part D enrollees of 1.8 percent, and 4) payment error related to prescription drug event data validation of 12.7 percent.

 

The majority of this final component error estimate was due to missing prescription documentation. Program experience has shown that response rates to this type of documentation request will improve over time.

 

·        The Medicaid error rate is 9.4 percent, or $22.5 billion in estimated improper payments. This rate reflects a three-year average of the 2008, 2009, and 2010 rates which were 10.5 percent, 8.7 percent and 9.0 percent respectively. Only one-third of he states are reviewed each year.

 

While improper payment rates are not necessarily an indicator of fraud in Medicare, Medicaid or CHIP, they do provide HHS, the Centers for Medicare & Medicaid Services (CMS), and states with a more complete assessment of how many errors need to be fixed.

 

“Over the past year we have improved the processes we use to review Medicare and Medicaid payments in an effort to identify if there are specific issues that need to be addressed,” said CMS Administrator Donald M. Berwick, M.D. “The President has directed HHS and CMS to cut the fee for service error rate in half by 2012. This is a priority for CMS and we are on our way towards achieving it. ”

 

For 2010, CMS applied the more stringent review criteria for measuring Medicare FFS improper payments that the Agency implemented in 2009. The primary modification required adherence to the documentation requirements outlined in Medicare regulation, statute, and policy, rather than allowing for clinical review judgment based on billing history and other available information. The primary causes of errors in the Medicare FFS program for 2010 are insufficient documentation and medically unnecessary services. The 2010 error rate of 10.5 percent is lower than the error rate of 12.4 percent that was calculated for the claims reviewed under the more stringent review criteria in 2009.

 

CMS is continuing to invest time and resources to work with providers across the country and eliminate errors through increased and improved training and education outreach.

 

“We are enhancing our efforts to educate and inform doctors, hospitals and other health care providers about the comprehensive requirements to help lower the number of errors and improper payments, not only across Medicare, but also in Medicaid and CHIP,” said Berwick.

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