HHS, CMS Officials Concede Most Improper Payments Just Errors, Not Fraud

WASHINGTON — After years of being tarred with the black
brush of fraud, HME and other health care providers got a bit of
redemption last week when two top health care officials testified
before a House subcommittee that most improper health care payments
were the result of errors, not fraud.

According to Daniel R. Levinson, inspector general for the
Department of Health and Human Services, improper payments for
fiscal year 2010 totaled $56.8 billion — most of which was
not the result of fraudulent providers.

“We … found that insufficient documentation, miscoded
claims and medically unnecessary services and supplies accounted
for 98 percent of the improper payments” made by the government to
HME providers, hospitals, physicians, skilled nursing facilities,
home health agencies and hospital outpatient departments, Levinson
told members of the House Appropriations Subcommittee on Labor,
Health and Human Services, Education and Related Agencies March
17.

Those figures, he said, came from the 2009 Comprehensive Error
Rate Testing program, the latest available such report.

Deborah Taylor, CFO and director of CMS’ Office of Financial
Management, also told committee members that errors were mostly to
blame for improper payments.

“They are usually not fraudulent nor necessarily payments for
inappropriate claims,” she said.”Rather, they tend to be an
indication of errors made by the provider in filing a claim or
inappropriately billing for a service.”

Those comments got a thumbs-up from industry consultant Miriam
Lieber of Sherman Oaks, Calif.-based Lieber Consulting.

“For so many years the unscrupulous providers that were let into
this industry were really the fault of CMS,” she said. “They gave
them the provider numbers, we didn’t.”

The vast majority of providers are honest and have no intent of
defrauding the government, Lieber said. For example, she said just
last week she spent an entire day working with a young woman new to
billing who did not understand the intricacies of the Medicare
coding system.

“Do you think that she, at age 22, was trying to defraud the
government?” Lieber asked. “No, she was literally a young woman
trying to do her job, and no one would give her information.”

While Lieber said she appreciated the officials’ comments, she’s
not so sure they will go very far in erasing the black mark that
the industry has carried for so long.

“Will they take the black mark off us? I don’t know,” she said.
“Then they would have to admit they are fallible.”

At Thursday’s hearing, Levinson and Taylor said the OIG and CMS
were working in concert on remedies to avoid improper payments.

For example, Levinson said, after finding pervasive
documentation errors in some services — including claims for
standard and complex wheelchairs, 60 percent of which did not
meet one or more documentation requirements, he said —
“we recommended that CMS take several actions to address these
errors, including improving controls, educating providers and
clarifying guidance.”

Taylor noted that CMS expects to process 1.2 billion claims in
2011. The agency has some automated safeguards in its system that
could detect and reject payments for “medical services that are
physically impossible, such as a hysterectomy billed for a male
beneficiary.”

It also has implemented edits aimed at stopping payment of
claims after a beneficiary’s date of death; for HME while the
beneficiary is receiving care in an inpatient setting; and for
individual services that should have been bundled into another
payment.

In addition, she said, local system edits have been enacted to
halt improper payments related to such things as HME bundling
(wheelchairs and accessories and knee prosthetics).

“Some vulnerabilities cannot be fixed with automated edits and
may require ongoing medical review and other more resource
intensive activities,” she said in her testimony. “As such, the
president’s FY 2012 budget request includes a legislative proposal
that would allow CMS to retain a dedicated portion of the funds
recovered by recovery auditors to implement additional corrective
actions to prevent future improper payments, such as targeted
prepayment review and provider education.”

That could achieve net savings of $230 million over 10 years,
Taylor said. “CMS is exploring way[s] to leverage existing
compliance programs within the provider community to inform and
educate providers about payment vulnerabilities,” Taylor told the
committee.

She said CMS is committed to cutting its Medicare
fee-for-service error rate in half by 2012, from 12.4 percent to
6.2 percent.

“CMS is making progress in meeting this goal, with a 1.9 percent
point reduction in the error rate between FY 2009 and FY 2010,”
Taylor said.

Read Levinson’s full testimony. Read Taylor’s full testimony.