Washington

For the second year in a row, the rate of improper Medicare payments continued to decline in 2001.

According to a recent report from the Department of Health and Human Services' Office of Inspector General, the improper payment rate, which estimates the portion of Medicare fee-for-service payments that do not comply with Medicare laws and regulations, dropped to 6.3 percent last year from 6.8 percent in 2000.

Improper Medicare benefit payments made up $12.1 billion out of a total of $191.8 billion in processed fee-for-service claims reported for 2001 by the Baltimore, Md.-based Centers for Medicare and Medicaid Services, the OIG estimated.

And, the current 6.3 percent estimate is the lowest since the OIG began analyzing payment error rates in 1996. In fact, the 2001 estimate is less than half the 13.8 percent error rate reported for 1996.

“We are continuing to make significant improvements to assure that payments for Medicare services are accurate and correctly documented,” said HHS Secretary Tommy Thompson. “We also are working to make our procedures and rules more understandable through our regulatory reform efforts, which will help physicians and other providers avoid unintended errors.”

The OIG credits the reduction in improper payments to CMS's continuing corrective actions, efforts by health care providers to comply with Medicare reimbursement regulations, and fraud and abuse initiatives conducted by CMS, Congress, the Department of Justice and the OIG.

For 2001, the OIG reviewed the medical records behind 6,594 fee-for-service claims filed on behalf of 600 randomly selected beneficiaries nationwide. Of the claims, 954 did not comply with Medicare regulations.

The OIG identified three major categories of improper payments: documentation errors, medically unnecessary services and coding errors. Documentation errors, which include insufficient or no documentation to support the claims, represented the largest error category in three of the last six years, according to the OIG.

“There still is important work to be done,” said CMS Administrator Tom Scully. “At Secretary Thompson's direction, we are developing a financial system that will enable us to better manage our programs. Providers are [becoming] more accurate, and as a result, taxpayer dollars are more focused on good patient care.”

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