CMS needs to improve oversight of Medicare contractors' error rate reduction plans, report says

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Too many Medicare providers are receiving improper payments, and the Centers for Medicare & Medicaid Services should clamp down by doing a better job overseeing its contractors' error rate reduction plans, according to a new government report.

The CMS Comprehensive Error Rate Testing (CERT) program estimates how many improper Medicare payments are made by administrative contractors each year. Based on information provided in CERT reports,contractors are required to create error rate reduction plans. These plans identify particular corrective actions the contractor will take, such as providing education to providers prone to making errors on their claims, or improving medical review of claims.

In 2011 and 2012, there were a number of problems in contractors' error reduction plans, and CMS did not provide robust oversight of them, according to a Jan. 16 report from the Department of Health and Human Services Office of the Inspector General. In 2012, the CERT-estimated improper payment rate was 8.5%, while the target was 5.4%, the report notes. That rate represents nearly $30 billion in improper reimbursements.

While most of the error reduction plans included all the required elements, the corrective actions they described were not always relevant to the issues identified in the contractors' most recent CERT results, the OIG report states. There also was dramatic inconsistency in the number of corrective actions listed in the plans, and the number did not vary according to the contractors' error rates.

For example, a plan to address a 24% error rate did not list any new corrective actions, while a plan for a 5% error rate listed 58 new corrective actions.

Despite these issues, CMS approved all 76 plans that the OIG reviewed without recommending any different or additional corrective actions, according to the report. CMS also is not timely in reviewing plans, and could better utilize CERT data in evaluating them, the OIG found.

The report puts forward several recommendations, including that CMS review its oversight process for these error reduction plans and provide additional guidance for contractors and plan reviewers. CMS also should reevaluate the financial incentives available to Medicare administrative contractors for reducing their error rates, the OIG investigators stated.

CMS concurred with all the recommendations.

Click here to access the complete report.