OIG report prods federal regulators to get tougher

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A Congressional watchdog group this week criticized the Department of Health & Human Services for failing to keep its improper payment rates low in its Medicare fee-for-service and Medicaid programs.

In a report dated Wednesday, the Office of Inspector General concluded that HHS failed to lower the improper error rate for Medicare fee-for-service below 10%, and had a higher-than-projected improper payment rates for the Medicaid program. For 2014, the agency reported an improper payment rate of 12.7% for Medicare fee-for-service, which also exceeded the projected target rate of 9.9%. Medicaid's reported improper payment rate (6.7%) exceeded its target rate (5.6%).

Rate thresholds are mandated under the Improper Payments Information Act of 2002. Subsequent amendments to the act were made by the Improper Payments Elimination and Recovery Act of 2010 and Improper Payments Elimination and Recovery Improvement Act of 2012.

In its defense, HHS countered that Medicare providers have struggled with documentation rules — a key culprit in in the higher-than-expected improper payment rate in 2014.

HHS reported that Medicare fee-for-service recovery auditors collected $2.4 billion in fiscal 2014, compared with $3.7 billion the year before, the OIG noted. HHS said the primary reason for the decrease was the cessation in Recovery Audit Contractor activities due to the delay in awarding new Medicare FFS RAC contracts.

The OIG recommended that HHS “address its noncompliance with certain provisions of the act.”