CMS cuts improper payments in half

Sunday, November 13, 2005

WASHINGTON - Aggressive oversight and new improvement efforts have cut the number of improper fee-for-service Medicare claims by half in one year, from 10.1% in 2004 to 5.2% in 2005, a $9.5 billion reduction in improper payments, CMS Administrator Mark B. McClellan announced last week.

"The unprecedented, $9.5 billion reduction in improper Medicare payments reflects our commitment to careful measurement and targeted oversight, and we intend to keep building on these efforts," said Dr. McClellan. "We are measuring the accuracy of payments more closely, and that enables us to target our efforts more effectively with Medicare contractors and providers."

The Medicare fee-for-service error rate has declined from 14.2% in 1996, when the Medicare improper payment rate was first reported, to the current 5.2%. The reduction in the error rate has occurred despite a growing volume of claims and complexity of payment processing at CMS. CMS pays more than 1 billion fee-for-service claims each year, and provides oversight to state payments for services provided by health care professionals under Medicaid and the State Children's Health Insurance Program (SCHIP). In 2005, Medicare also made monthly payments to more than 450 Medicare health plans across the United States, CMS reported.

The significant reduction in the Medicare fee-for-service error rate from 2004 to 2005 can be attributed largely to marked improvement in the no documentation and the insufficient documentation error rates. Provider education also helped reduce the insufficient documentation error rate to just over 1%.