Medicare Compliance & Reimbursement

Incentive-based contracting reform may help to eliminate coding errors and incorrect payments.

Buckling down on claims documentation requirements has helped HHS reduce improper Medicare payments by $9.6 billion--44 percent--according to a Feb. 2 improper payments report from the Office of Management and Budget. The federal government exceeded its $5 billion goal by eliminating $7.8 billion overall in improper payments during fiscal year 2005. This reduction reflects a 17 percent drop in improper payments government-wide, the OMB says.

"We place a high priority at HHS on detecting and preventing improper or fraudulent payments, and we have worked aggressively to cut the number of improper fee-for-service Medicare claims payments by half in just one year," says HHS Secretary Mike Leavitt. "We are now taking these proven strategies to help us achieve similar results for payments in Medicaid, SCHIP and Medicare managed care and prescription drug plans."

Improper Medicare payments accounted for $12.1 billion in 2005--nearly one-third of government-wide improper payments. In addition to HHS' more aggressive claims documentation requirements, it is addressing incorrect payments and coding errors through incentive-based contracting reform with commercial-based claims processors that reward payment accuracy and sanction payment errors.

"In meeting the President's charge to eliminate improper payments, we are off to a great start and expect to build on these successes in the coming years," says Linda Combs, OMB Controller and head of the Office of Federal Financial Management.

To view the full report, go to www.whitehouse.gov/omb/financial/fia/improv_accuracy_fed_payments.pdf.