When does a review of 0.5% make sense?

Share this content:
Kristin Walter
Kristin Walter

Would you feel safe flying if airlines only inspected 0.5% of their fleet of planes? What about if smoke detectors for your home were rolling off the assembly line with only 0.5% being tested to ensure that they worked to sense a fire emergency?

That's what we're facing with payment accuracy in Medicare these days. The Centers for Medicare & Medicaid Services have drastically scaled back review of the claims providers submit to the Medicare Fee for Service program for payment. Today, only 0.5%  of a subset of Medicare claim types are reviewed to ensure they have been correctly billed. Interestingly, that small percentage of claims are reviewed after all claims have been paid.

As a result, it's estimated that Medicare FFS improperly pays providers more than $40 billion each year due to preventable billing errors. These improper payments are quite different than fraud, which is accounted for separately. Improper payments are just nationwide billing mistakes – coding errors, double billing, up-coding, billing for unnecessary services – issues that could be caught and corrected if the claims are reviewed. In fact, over the past four years, billing errors have drained more than $166 billion in tax dollars from the Medicare Trust Funds, putting Medicare Part A right in the crosshairs of insolvency within the next 10 years.

Earlier this summer, the Council for Medicare Integrity sent a letter to the Department of Health and Human Services Secretary Tom Price urging the new administration to look at the problem of wasteful spending in Medicare with fresh eyes and think about the funding potential of adding $40 billion back into their budget each year.

It is our hope that those overseeing the Medicare program can move toward a more balanced approach between the interests of the provider community and the future solvency of the program.

Our organization made several recommendations, based on proven private sector best practices, to Secretary Price on the heels of his testimony before the Senate Finance Committee where he stated, “we are absolutely committed to program integrity.” We recommend:

  • In the short term, Medicare additional document request limits should be increased to allow auditors to review up to 5% of claims. In the longer term, we welcome a discussion about the implementation of risk-based ADR limits.
  • CMS create efficiencies and expedited processes to allow audit scenarios that were previously approved and successful – to be defined by low appeals and/or even high success in the appeals process – to again be audited. CMS currently allows auditors to review fewer than 20 Medicare claim types (down from 800 claim types previously).
  • Expanding the types of claims that can be reviewed for billing errors. For example, diagnosis related group (DRG) reviews, which are very clearly correctly billed or not, should no longer be artificially limited.
  • CMS move forward with a request to Congress for authorization of a permanent Recovery Audit Contractor prepayment review program. For the past two years, the U.S. Government Accountability Office (GAO) has urged CMS to ask for the legislative authority to implement a permanent Medicare prepayment review program to prevent improper payments from leaving the program improperly in the first place.  
  • These four recommendations are all common sense practices that will bring the review of Medicare claims in closer alignment with the practices used everyday by the private sector.

Private health insurance payers generally have all claims reviewed for billing accuracy by an outside audit contractor both before and after they are paid. This is the industry standard to ensure billing accuracy. Considered a basic cost of doing business, the same providers billing Medicare comply, without issue, with the more extensive claim reviews that private health insurance companies require in order to approve their claims for payment.

It's in everyone best interest for Medicare to enhance payment accuracy within the program. Providers will get paid the correct amounts allowed by the program in a timely manner; taxpayer dollars will be spent more efficiently and effectively and ultimately; funds that were previously overpaid can be recovered to stave off future cuts to coverage that would negatively impact the ability of American seniors to afford healthcare in the future.

Kristin Walter is a spokeswoman for The Council for Medicare Integrity.