OIG: Medicare should adjust payment error estimate to reflect appeal decisions

AHA News Now

The Centers for Medicare & Medicaid Services should develop a reliable way to adjust its Medicare fee-for-service payment error rate to reflect the outcome of appeal decisions, according to a new report by the Department of Health and Human Services' Office of Inspector General. CMS annually submits to Congress an estimate of improper Medicare FFS payments based on its Comprehensive Error Rate Testing program, which Medicare recovery auditors and administrative contractors use to identify particular types of Medicare claims to audit. "Our review found that CERT claim payment denials that were overturned after the cutoff date for determining the Medicare FFS error rates would have reduced the error rate that CMS reported from 7.8% to 7.2% for fiscal year 2009 and from 10.5% to 9.9% for FY 2010," OIG said. "Approximately 5.5% of the CERT claim payment denials for FY 2009 and 7.6% for FY 2010 were overturned during one of the first three levels of the appeals process. If CMS had included these overturned CERT claim payment denials in its error rate calculations, it would have decreased the estimated value of reported errors for FYs 2009 and 2010 by approximately $2 billion each year." In the report, CMS concurs with OIG's findings and outlines steps for implementing the recommendation.

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