CMS Reports $11.6 Billion In Errors for 2003

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In a mid-November announcement, the Centers for Medicare and Medicaid Services estimated its improper Medicare payments rate for 2003 at 5.8 percent, or $11.6 billion. This figure, however, excludes providers who did not respond to the agency’s error-rate survey. When these non-responders are included, the error rate becomes 9.8 percent, CMS reported.

Each year, CMS measures claims found medically unnecessary, inadequately documented or improperly coded. From 1996 until last year, the study — conducted by the Department of Health and Human Services Office of Inspector General — was based on a survey of some 6,000 claims. During those years, the error rate declined from 13.8 percent in 1996 to 6.3 percent in 2001 and 2002.

This year, CMS used an outside contractor to determine the error rate and reviewed 128,000 Medicare claims to learn “more precisely where errors are being made,” the agency said. The new effort provides CMS with contractor-specific error rates, error rates by provider type and error rates by service type.

The report, based on claims submitted throughout 2002, says that among all health care providers, 45 percent of errors reported were due to insufficient documentation, while 21.7 percent were due to medically unnecessary services.

DMERCs and DME suppliers, on average, showed a 13.6 percent error rate.

“The annual error rate gives us an estimate of how much billing mistakes cost the American taxpayer, and that number is always too high,” said CMS Administrator Tom Scully. “Now that CMS has detailed error rates, we can aggressively target our efforts by strengthening the management of our contractors and [concentrating] on the problems indicated by the error rate. Our goal is to bring about a dramatic reduction in the Medicare payment errors in the next 24 months.”

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