CMS: Tougher Error Rate Standards

The Centers for Medicare & Medicaid Services (CMS) announced recently that changes the agency made this year to its fee-for-service (FFS) medical review process are proving favorable.

“This year, we made the call to stop calculating our error rate in fee-for-service Medicare the way that the previous Administration did and to start using a more rigorous method in calculating this rate in keeping with our mandate to root out errors and fraud,” said the U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius.

As a result, this year’s Part A FFS error rate is 7.8 percent, or $24.1 billion, CMS reports, compared to last year’s 3.6 percent.

CMS also reported:

  • The composite Medicaid error rate is 8.7 percent, compared to 10.5 percent for states measure in 2007;
  • the baseline composite Medicare Advantage, or Part C, error rate, based on payment year 2007, is 15.4 percent, or $12 billion; and
  • for the Medicare Part D composite error rate, which is under development, and comprised of three components this year: The payment system error is 0.59 percent; the low-income subsidy payment error is 0.25 percent; and the payment error related to Medicaid status for dual eligible Part D enrollees is 1.06 percent.

Note: The reporting of a Children’s Health Insurance Program (CHIP) error rate has been temporarily suspended while CMS develops a new final rule for the Payment Error Rate Measure (PERM) program, as required by the Children’s Health Insurance Program Reauthorization Act of 2009.

CMS changed how it reviews Medicare claims for inpatient hospital services and eliminated the use of past billing records as part of a complex medical review based on recommendations from the Office of Inspector General (OIG) and others.

CMS said that making sure providers:

  • submit all required clinical/medical documents to support claims;
  • include legible signatures on medical documents — no more using a provider’s claim history to fill in missing treatment documentation; and
  • include medical information to support durable medical equipment (DME) claims in addition to supplier records — coupled with the new review process — is behind any error rate increases.

Improper payment rates are not necessarily an indicator of fraud in Medicare or any other federal health care program, but the agencies who are responsible for the oversight of Medicare and Medicaid funds say they provide a more complete assessment of how many errors need to be fixed.

“As we move forward in our review of the Medicare and Medicaid error rate data, we expect to be able to determine if there are specific trends that can better help us identify weaknesses in our programs or systems,” said Acting CMS Administrator Charlene Frizzera. “We hope to be able to use data available through the use of new electronic health record reporting that can help in the design of new and innovative approaches to finding emerging trends and vulnerabilities in high risk areas such as durable medical equipment and home health.”

HHS and the CMS said they also plan to invest more time and resources into working with providers to eliminate errors through increased and improved training and education outreach.

“It’s important that we continue to work closely with doctors, hospitals and other health care providers to make sure they understand and follow the more comprehensive fee-for-service requirements,” said Frizzera. “We are committed to working closely with them to reduce the rate of improper payments.”

For more details, read the CMS press release and fact sheet, issued Nov. 18.

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