CMS Reports Medicare Paid $24.1 Billion in Error in 2009

eduTrax News Service - Nov. 18, 2009.

The Centers for Medicare & Medicaid Services (CMS) erroneously paid $24.1 Billion, or 7.8 percent of claims, during FY2009, according to a press release posted today on the CMS website. This is more than double the reported error rate for FY2008 of 3.6 percent. The press release cites new standards were used to arrive at these figures, including the elimination of the use of past billing records as part of a complex medical review. Although no other specifics are given for how the Medicare FFS claims review process changed, a Fact Sheet was also posted.

The Fact Sheet provides some further details on their findings, including:

• the baseline composite Medicare Advantage, or Part C, error rate, based on payment year 2007, is 15.4 percent, or $12.0 billion;
• the Medicare Part D composite error rate is under development, and three components are being reported this year: the payment system error of 0.59 percent, the low-income subsidy payment error of 0.25 percent, and payment error related to Medicaid status for dual eligible Part D enrollees 1.06 percent;
• the composite Medicaid error rate is 8.7 percent, compared to 10.5 percent for states measured in 2007.

Besides the change in the method of calculating erroneous payments, CMS is also taking other steps to ensure:

• providers are submitting all required clinical and medical documents to support a claim,
• providers' signatures on medical documents are legible,
• a provider's claims history can no longer be used to fill in missing treatment documentation, and
• a requirement that medical information from a health care provider be included to support durable medical equipment claims, in addition to the records from suppliers.

Other findings reported in the Fact Sheet

The Medicaid composite error rate is 8.7 percent. CMS uses a 17-state sample to calculate the national PERM error rate. Each state is reviewed once every three years.

Improper payment rates in Medicaid include those payments that may have been paid incorrectly and, as in Medicare, do not necessarily reflect fraud.

The vast majority of Medicaid errors are due to inadequate documentation, for example, providers either not submitting information to support their FFS or managed care claims or not submitting additional data when requested.

Other errors are due to services provided under Medicaid to beneficiaries who were not eligible for Medicaid coverage or for the services received.

Reporting of a CHIP error rate has been temporarily suspended while CMS develops a new final rule for the PERM program, as required by the Children's Health Insurance Program Reauthorization Act of 2009.

Click to see the Fact Sheet.