HHS says FY99 Medicare error rate held steady from last year
HHS says FY99 Medicare error rate held steady from last year
By MATTHEW HAY
HHBR Washington Correspondent
WASHINGTON Department of Health and Human Services (HHS; Washington) Inspector General June Gibbs Brown told a Senate Appropriations subcommittee last week that the Medicare fee-for-service error rate held virtually steady at 7.97% last year, compared to 7.13% in 1998.
According to Brown, HHS’ detailed medical and audit review of a statistical selection of 600 beneficiaries nationwide, with 5,223 fee-for-service claims processed for payment during FY99, found that 1,034 claims did not comply with Medicare laws and regulations.
By projecting these sample results, HHS estimated that FY99 net payment errors totaled about $13.5 billion nationwide roughly 7.97% of total Medicare fee-for-service benefit payments. Brown championed the fact that the steep reduction in the error rate from 1996 and 1997 had been maintained.
According to Brown, unsupported services represented the largest error category every year except FY98, when they dropped dramatically. However, last year that category witnessed an estimated $3.4 billion increase over the year before.
Last year’s estimated $5.5 billion in unsupported services consisted of $4.5 billion in claims for which medical review staff found that the documentation was insufficient to support the billed services and $1 billion in claims for which no documentation was provided. According to Brown, these errors were largely attributable to home health agencies ($1.7 billion), durable medical equipment suppliers ($1.6 billion), and physicians ($1.1 billion).
She told the subcommittee that payment errors could range from inadvertent mistakes to outright fraud and abuse, such as phony records or kickbacks.
"We cannot quantify what portion of the error rate is attributable to fraud," she said.
But the House Ways and Means Committee had a considerably different take on these data. "This report highlights what we have been saying all along," asserted House Ways and Means Committee Health Subcommittee Chairman Rep. Bill Thomas (R-CA), "(which is) that the Clinton Administration has failed to instill discipline to the Medicare program."
Ways and Means pointed out that 8% of total Medicare payments represents $13.5 billion. "This is what happens with a government-run healthcare program more waste, fraud, and abuse," said Ways and Means Chairman Bill Archer (R-TX). He said it also casts doubt of Medicare’s ability to manage the administration’s proposed $200 billion prescription drug benefit.
Meanwhile, HCFA plans to use the four durable medical equipment regional carriers (DMERC) to launch a new comprehensive error-rate testing program that will establish baselines to measure each contractor’s progress toward correctly processing and paying the nearly 1 billion Medicare claims filed each year.
Medicare will use the results to target efforts to properly pay for services provided to its nearly 40 million beneficiaries. HCFA will launch its error-rate initiative this summer by determining error rates for the DMERCs, which process nearly 50 million claims each year. Within a year, the agency expects to perform similar evaluations for all its claims-processing contractors.
HCFA will assign the work this spring to one of 13 special contractors selected last year under new authority obtained in the Health Insurance Portability and Accountability Act of 1996.
For each contractor, Medicare will conduct reviews for a statistically valid sample of claims to determine whether healthcare providers were underpaid or overpaid for the sampled claims. According to HCFA, the results will reflect not only the contractor’s performance, but also the billing practices of the healthcare providers in their region.
The results will lead to a contractor-specific error rate that Medicare will track. Contractors would develop targeted corrective action plans to reduce payment errors through provider education, claims review, and other activities.
The comprehensive error rates are the latest step in the agency’s ongoing efforts to ensure effective management of these private contractors. HCFA began a new initiative to strengthen its oversight of contractors in 1998, including a new high-level position to coordinate contractor oversight nationally, filled by a physician with experience fighting fraud, waste, and abuse; a new national contractor performance evaluation strategy to ensure consistency and to focus on key contractors and high-risk areas; national teams to evaluate contractors’ fraud and abuse efforts and other key functions using standardized reporting and evaluation protocols; and the development of additional, measurable standards, which will allow for more targeted reviews of specific areas of contractor performance.
The agency is also amending its contracts with these companies to ensure that they have plans to correct any financial-management issues.
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