Medicare fee-for-service estimated improper payments decline by $15 billion since 2016

Nov. 17, 2020

The Centers for Medicare & Medicaid Services (CMS) announced that the Medicare Fee- For-Service (FFS) improper payment rate has continued to decline, which translates to less fraud, waste and abuse that can increase the fiscal burden on the nation’s healthcare system.

Over the past four years, CMS’ aggressive corrective actions have led to an estimated $15 billion reduction of Medicare FFS improper payments. This reduction is a result of CMS’s steadfast efforts to identify the root causes of improper payments, implement action plans to reduce and prevent improper payments, and extend the Agency’s capacity to address emerging areas of risk through work groups and interagency collaborations.

The reduction in improper payments represents considerable progress and savings for American taxpayers and resulted from concerted CMS efforts to address improper payments at the source. The Medicare FFS estimated improper payment rate decreased to 6.27 percent in FY 2020, from 7.25 percent in FY 2019, the fourth consecutive year the Medicare FFS improper payment rate has been below the 10 percent threshold for compliance established in the Payment Integrity Information Act of 2019. This year’s decrease was driven largely by progress in the following important areas:

·        Home health improvements, including clarifying documentation requirements and educating providers through the Targeted Probe and Educate program, resulted in a $5.9 billion decrease in estimated improper payments from FY 2016 to FY 2020.

·         Skilled nursing facility claims saw a $1 billion reduction in estimated improper payments in the last year due to a policy change related to the supporting information for physician certification and recertification for skilled nursing facility services, as well as CMS’ Targeted Probe and Educate efforts.

Healthcare costs are skyrocketing; by 2026, one out of every five tax dollars will be spent on healthcare. To constrain unsustainable cost growth, CMS must continue to ensure payments are made according to the rules. Improper payments represent payments that don’t meet program requirements – intentional or otherwise – and contribute to inaccurate spending of Americans’ tax dollars but are not all representative of fraud. Rather, improper payments might be overpayments or underpayments, or payments where sufficient information was not provided to determine whether a payment is proper or not.

CMS has developed a five-pillar program integrity strategy to modernize the agency’s approach to reducing the improper payment rate while protecting its programs for future generations:

·         Stop Bad. CMS works with law enforcement agencies to crack down on “bad actors” who have defrauded federal health programs.

·         Prevent Fraud. Rather than the expensive and inefficient “pay & chase” model, CMS prevents and eliminates fraud, waste and abuse on the front end by proactively strengthening vulnerabilities before they are

·         Mitigate Emerging Programmatic Risks. CMS is exploring ways to identify and reduce program integrity risks related to value-based payment programs by looking to experts in the healthcare community for lessons learned and best

·         Reduce Provider. To assist rather than punish providers who make good faith claim errors, CMS is reducing burden on providers by making coverage and payment rules more easily accessible to them, educating them on CMS programs, and reducing documentation requirements that are duplicative or unnecessary.

·         Leverage New Technology. CMS is working to modernize its program integrity efforts by exploring innovative technologies like artificial intelligence and machine learning, which could allow the Medicare program to review compliance on more claims with less burden on providers and less cost to taxpayers.

CMS has the fact sheet.

CMS has the release.