Medicare Improper Payments Fall $15B Since 2016    

Situation Report | November 23, 2020

The estimated Medicare fee-for-service (FFS) improper payment rate continues to decline, according to the U.S. Centers for Medicare and Medicaid Services (CMS). It has fallen below 10 percent for the fourth year — the threshold for Payment Integrity Information Act compliance — from 7.25 percent in fiscal year (FY) 2019 to 6.27 percent in FY 2020.

Improper payments involve situations that do not meet program requirements, including unintentional circumstances, which means that they do not necessarily indicate fraud. This can include overpayments, underpayments, or payments where information was insufficient to determine whether a payment is proper or not. 

CMS notes home health’s role improving payment integrity (and driving a $5.9 billion decrease in improper payments), citing efforts by CMS, contractors, and providers to clarify and appropriately meet documentation requirements, including through provider education like the Targeted Probe and Educate (TPE) program.

Many home care industry representatives believe the reduction in Medicare home health improper payments is a result of both improved provider and Medicare contractor performance. For years, the majority of home heath billing errors have been documentation related. Clarification of documentation requirements is vital for home health agencies to consistently meet Medicare’s standards and for contractors to issue accurate determinations. 

In addition, skilled nursing facility claims saw a $1 billion reduction in estimated improper payments in the last year due to a policy change related to the supporting information for physician certification and recertification for skilled nursing facility (SNF) services, as well as CMS’s TPE efforts for SNFs.