HHS financial report: Medicare FFS improper payment rate is lowest since 2010
CMS recently announced that the Medicare Fee for Service (FFS) improper payment rate is at its lowest level since fiscal year (FY) 2010. The FY 2019 improper payment rate is 7.25%, according to the U.S. Department of Health and Human Services’ (HHS) annual Agency Financial Report.
CMS paid $28.9 billion in Medicare FFS improper payments in FY 2019—$7 billion less than what it paid for improper payments in FY 2018. The agency estimates that the reduction in the overall improper payment rate is due to reductions in improper payments for home health and Part B claims as well as claims for durable medical equipment, prosthetics, orthotics, and supplies, according to the report.
However, despite the decrease in improper payments for these services between 2018 and 2019, improper payments for skilled nursing facilities (SNF), hospital outpatient, inpatient rehabilitation facilities (IRF), and home health claims continued to be significant contributing factors to the FY 2019 Medicare FFS improper payment rate, comprising over 36% of the overall estimated improper payment rate.
The reasoning for improper payments in these sectors, as noted in the report, continue to be insufficient documentation and medical necessity errors and are broken down as follows:
- Insufficient documentation for SNF claims.
- The improper payment rate for SNF claims increased from 6.55% in FY 2018 to 8.54% in FY 2019. Most errors were due to missing or insufficient certification/recertification statements.
- Insufficient documentation for hospital outpatient claims.
- The improper payment rate for hospital outpatient claims increased from 3.25% in FY 2018 to 4.37% in FY 2019. Most errors were due to missing or insufficient documentation to support medical necessity for billed services.
- Insufficient documentation to support the medical necessity of IRF claims.
- The IRF claims improper payment rate decreased from 41.55% in FY 2018 to 34.87% in FY 2019. The primary reason for these errors was that the IRF coverage criteria for medical necessity were not met.
- Insufficient documentation for home health claims.
- This continues to be a significant issue despite the improper payment rate decrease from 17.61% in FY 2018 to 12.15% in FY 2019. Most errors were due to insufficient or missing documentation to support the certification of home health eligibility requirements.
For more information on these findings and to learn about Medicare’s FFS corrective action plan to prevent future billing errors and monetary losses, see p. 202-210 of HHS’ report.