Medicare Program Paid $125 Billion Improperly Over Three Years

  • Payments lacked required coding, paperwork, medical need
  • Rate of incorrect payments may trigger congressional review

The U.S. Medicare program sent out more than $125 billion in improper payments over three years for a plan that insures hospital and medical services for the elderly, including home health care, possibly triggering a congressional review.

Improper payments from the plan, called Medicare Fee-For-Service, exceeded a threshold of 10 percent of total payments from fiscal 2013 through 2015, according to a report released Thursday by the Health and Human Services Department’s Office of Inspector General. After three consecutive years over the limit, the program is required by law to submit plans to Congress for re-authorization or returning to compliance, the report said.

Government watchdogs are urging a crackdown on waste and fraud in Medicare and other health programs. A study by the Government Accountability Office, Congress’s investigative arm, found that a related program that contracts with private insurers to provide benefits, called Medicare Advantage, made more than $14 billion in improper payments in fiscal 2013 that the companies didn’t return.

Coding, Paperwork

Improper payments are most often made in response to insufficient coding or paperwork, or when medical need hasn’t been established, and typically aren’t fraudulent, said Patrick Conway, chief medical officer for the Centers for Medicare and Medicaid Services, in a blog post. Health and Human Services failed to address earlier recommendations for reducing the rate and bringing it under the compliance threshold, the report said. 

Improper payment rates in the Medicare Fee-For-Service program were 10.1 percent in 2013, or about $36 billion; 12.7 percent in 2014, or $45.8 billion; and 12.1 percent in 2015, or $43.3 billion, according to Don White, a spokesman for OIG, in an e-mail. Insufficient documentation for home health claims was one of the primary causes of improper payments, according to the report.

In his blog post, CMS’s Conway said he was “pleased” to see that the rate of improper payments fell in 2015 from the previous year in the Medicare Fee-For-Service program. The agency is taking steps to encourage states and organizations to help reduce improper payments, he said.

The report was based on an audit, conducted by Ernst & Young LLP, which the inspector general’s office hired to study payments in several HHS programs. HHS “met many requirements but did not fully comply” with the regulations in 2015, according to a letter from the auditor to OIG included in the report.

“HHS has taken, and continues to take, a number of actions to address root causes” of improper payments, Ellen Murray, HHS assistant secretary for financial resources, said in a letter to HHS Inspector General Daniel Levinson dated May 9.

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