Error Rate Drops, but Medicare Still Lost $31.6 Billion to Preventable Billing Errors in FY2018

Error Rate Drops, but Medicare Still Lost $31.6 Billion to Preventable Billing Errors in FY2018

Prepayment claim reviews could stem this loss and add billions back into the federal budget

 Washington, D.C. (November 20, 2018) – The Centers for Medicare and Medicaid Services (CMS) has released the latest data pertaining to the Medicare Fee-for-Service (FFS) billing error rate. The agency reports that during the 2018 fiscal year, although the error rate dropped from 9.5% to 8.1%, this still resulted in a $31.6 billion loss to Medicare.

Each year, tens of billions of much-needed Medicare dollars are wasted due to rampant billing errors within the program. This is not Medicare fraud, the agency accounts for fraud separately. Over the past six years, Medicare has lost more than $230 billion to improper payments – preventable billing mistakes caused by simple coding errors, double billing, up-coding and insufficient documentation.“A drop in the error rate and ensuring efficient oversight of taxpayer dollars is commendable, but more dollars can be saved” said Kristin Walter, spokesperson for The Council for Medicare Integrity. “Medicare currently reviews between just 0.5  and 5 percent of a small subset of particular claim types for billing accuracy and that’s only after claims have been paid. This means that between 95 and 99.5 percent of Medicare claims are currently paid without a review for billing accuracy.”

Comparatively, as a routine course of business, private insurance companies review nearly 100 percent of submitted health care claims on both a prepayment and post-payment basis to confirm billing accuracy, adherence to contract terms and medical necessity.

“We urge CMS and Congress to boost Medicare oversight by authorizing a new level of resource protection – prepayment claim reviews – to catch and correct Medicare billing errors before claims are paid and ensure that providers are reimbursed quickly and accurately the first time.”

Like private payers, Medicare can leverage pre-payment audits to prevent improper payments. In FY2012, CMS successfully tested prepayment audits during the Medicare Prepayment Review Demonstration project. Recovery Audit Contractors (RACs) were authorized to review certain error prone Medicare claims for billing accuracy before they were paid. As a result of this short pilot program RACs prevented more than $192 million in improper payments from leaving the Medicare Trust Funds in error. The pilot program was so successful that the GAO recommended that “CMS should actively seek legislative authority to have RAs conduct prepayment claim reviews.”

Medicare prepayment audits would not only prevent the loss of billions of Medicare dollars each year, but will also reduce provider perceived audit burden stemming from the exclusive use of “pay and chase” methods of billing oversight. Medicare prepayment reviews would be completed within 30 days of a provider submitting their claim and documentation for reimbursement – ensuring that billing errors are corrected and providers are paid quickly and accurately the very first time. Prepayment reviews also take place long after service is provided to the patient, so they never interfere with a patient’s access to care.

“Congress currently faces numerous short, medium and long-term budget challenges, including finishing the FY 2019 budget, addressing the looming budget caps, and restoring a dangerously depleted Medicare Trust Fund. These factors will lead to difficult funding choices. Instead of considering cuts to the Medicare program, that will certainly negatively impact millions of American seniors and the providers who serve them, authorizing a permanent Medicare prepayment claim review program will add billions to Medicare’s bottom line and protect the health care coverage that Americans rely on every day.”

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

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