CMS contractors made billions in payment errors

WASHINGTON - Private companies that process health care claims from Medicare beneficiaries made almost $20 billion in erroneous or questionable payments in fiscal year 2004, according to a CMS report. The $19.9 billion in questionable payments includes $900 million in underpayments to providers because of errors and $20.8 billion in overpayments to providers, according to the report, “2004 Improper Medicare Fee-For-Service Payments Report.” The report is based on a survey of 160,000 of the more than one billion claims processed annually. Errors included claims that were paid despite being medically unnecessary or that were inadequately documented or improperly coded. The survey did not measure instances of alleged fraud, according to the Associated Press. Last year, Medicare reported that the error rate for FY 2003 was 5.8%. However, that figure was adjusted to exclude “a high proportion of claims” in which a provider did not respond to Medicare's request for medical records to support the claims. The unadjusted rate was 9.8%, slightly higher than this year's unadjusted 9.3% rate. Medicare officials said they decided not to include the adjustment because the analysis was larger and included greater detail, according to the Associated Press. In response to the survey, CMS hopes to cut the rate of questionable Medicare payments by more than half to 4% by 2008, Administrator Mark McClellan said. He added that CMS will conduct more extensive payment reviews and implement other quality controls to reach its goal. “The main objective here is to pay it right,” McClellan stated. Sen. Charles Grassley (R-Iowa), in December said, “With an improper payment amount of nearly $20 billion and an error rate approaching double digits, there is clearly an unacceptable problem here.”