Trend Report Identifies Top 5 Medicare Billing Issue Areas That Put Taxpayer Dollars At Risk


October 14, 2015        
Kristin Walter
(202) 898-0995

Trend Report Identifies Top 5 Medicare Billing Issue Areas That Put Taxpayer Dollars At Risk

Washington, D.C. – Today, the Council for Medicare Integrity (CMI) released a trend report identifying the top five CMS-approved billing issues that contribute most to Medicare waste. The issues include:

  • Durable Medical Equipment (DME): This area of Medicare billing has consistently had an incredibly high rate of billing errors, frequently billed incorrectly at a higher rate, causing an overpayment. According to the CMS Comprehensive Error Rate Testing (CERT) program, in FY2014, the error rate among DME billing was 1 percent, accounting for $5 billion in improper payments that year. Within the category of DME, three particular issue areas seem to be putting the solvency of the Medicare Trust Fund in the greatest jeopardy, they include: DME services are entwined with hospital or hospice care; Orthotics; and Hospice care provided during an inpatient hospital stay.
  • Home Health Claims: In FY2014, CMS reported that the billing error rate for this issue area was 4 percent, accounting for 19 percent of the overall Medicare FFS improper payment rate. The projected improper payment amount for home health services during FY2014 was $9.4 billion. A recent Department of Health and Human Services Office of the Inspector General (OIG) report found that Medicare paid skilled nursing facilities (SNFs) $1.1 billion more than it needed to in fiscal years 2012 and 2013.
  • Medicare Part A and B Pharmacy Claims: This billing area is highly prone to errors and both Medicare overpayments and underpayments are found in this category and corrected.
  • Diagnosis Related Group (DRG) Validation: The majority of corrections of this type are Medicare overpayments, but approximately 25 percent of these claim reviews uncover Medicare underpayments, allowing RACs to correct the record and ensure the provider is fully and fairly compensated for the work performed.
  • Therapy Cap Reviews: In 2014, President Obama signed into law the Protecting Access to Medicare Act that included a number of provisions affecting outpatient therapy caps. Unfortunately, a great deal of the time service is provided above the threshold.

In FY2014, the Medicare Fee For Service (FFS) billing error rate reached an all-time high of 12.7 percent, which equates to a loss of $46 billion that year alone. According to CMS reporting, the error rate has been climbing for the past three years.

The Recovery Audit Contractor (RAC) Program was put in place by Congress to identify and recover these improper Medicare payments. Since the program began, RACs have recovered $10 billion in improper payments while reviewing fewer than 2 percent of all Medicare claims. Independent third-party validators hired by CMS have shown Recovery Auditors have an average 96 percent accuracy rate. In early 2014, the RAC program was temporarily paused due to pressure from the hospital industry. Since then, auditors have only been able to review slightly more than 350 of the 800 issues that CMS has approved, leaving billions of dollars unrecovered.

“With Medicare Trustees estimating that the program will be bankrupt in a mere 15 years, it’s vitally important that we pay close attention to the billing issue areas causing the most misbillings and aggressively work to correct them. This will allow the return of billions of taxpayer dollars back to the Medicare Trust Fund, prolonging the life of the program,” said Kristin Walter, spokesperson for the Council. “CMI recommends that lawmakers use all the effective tools at their disposal, including the RAC program, to aggressively reduce Medicare improper payments.”

For more information, please visit: www.medicareintegrity.org

# # #

About the Council for Medicare Integrity
The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.


  • Share

Comments are closed.