CMS Announces Reduction in Medicare Error Rates

November 18, 2005

On November 10 the Centers for Medicare and Medicaid Services (CMS) Administrator, Mark McClellan, MD, Ph.D., announced a 50 percent reduction in the number of improper fee-for-service Medicare claim payments (down from 10.1 percent in 2004 to 5.2 percent in 2005) - a $9.5 billion drop. He attributed the significant reduction in error rates for the 2004-05 fiscal year to aggressive oversight, improvement in the “no documentation” and “insufficient documentation” error rates, and provider education.

According to CMS, provider education helps reduce the insufficient document error rate to just over one percent, 1.1 percent of payments had errors due to insufficient documentation being submitted (4.1 percent in 2004). Other CMS findings include:

0.7 percent had errors due to non-responses to request for medical records, referred to as “no documentation” (3.1 percent in 2004);

  • 1.6 percent due to medically unnecessary services (Same in 2004);

  • 1.5 percent due to incorrect coding (1.2 percent in 2004); and

  • 0.2 percent due to other errors (Same in 2004).

Further efforts to reduce the Medicare error rate include requiring its fee-for service contractors to:

  • Develop corrective action plans that include efforts to educate providers about the importance of submitting thorough and complete medical records;

  • Identify which providers or contractors need to review their submission of claims and improve their educational efforts, and

  • Use the performance results to develop local efforts to lower their error rates by addressing the cause of the errors and outlining corrective steps.

Dr. McClellan said that similar oversight programs for payment to Medicaid, State Children Health Insurance Program (SCHIP), and Medicaid managed care and prescription drug plans are in development.

According to a CMS press release, CMS has requested $720 million from Congress for Medicare Integrity Programs and $80 million to continue similar oversight in other programs. CMS is already measuring the accuracy of state payments for Medicaid and SCHIP through the Payment Accuracy Measure pilot program and is developing ways to track improper payment in the Medicare Part D program.

A more detail report and comprehensive analysis of the CMS’s findings will be release at a later date.

Access the CMS Press Release online. View more information on the Medicare error rate program. Please contact Shuan Tomlinson at 800-338-2746 ext. 4547 or by email at stomlinson@acponline.org with questions on these or other topics.