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.