Fraud investigations cut Medicare overbilling rate
Improper payments totaled $9.3 billion
A new report from the Department of Health and Human Services shows that the government’s dogged pursuit of health care fraud and abuse allegations is having its effect on how hospitals code Medicare claims.
According to the report, the rate of improper Medicare payments to hospitals and other health care providers dropped last year to the lowest error rate since the government initiated comprehensive audits three years ago. In fiscal year 1998, the error rate was estimated at 7.1%, accounting for about $12.6 billion. By contrast, the error rate in 1997 was an estimated 11%, or $20.3 billion. That’s a one-year decline of about 38%. In 1996, the numbers were even higher, with an error rate of 14%, or about $23.2 billion in improper payments.
Auditors from the department’s Office of the Inspector General (OIG), with the help of medical experts, derived those numbers by reviewing a "comprehensive, statistically valid sample" of 5,540 Medicare fee-for-service claims and supporting medical records representing 600 beneficiaries nationwide. The total value of the claims reviewed was $5.6 million. The claims were reviewed in terms of accuracy and legitimacy.
The improper payments resulted from everything from simple errors to outright fraud and abuse, but the OIG auditors weren’t able to quantify the exact proportion of intentional fraud. Even so, they identified two main problem areas: billing for medically unnecessary services and upcoding services to secure a higher reimbursement than was justified by the medical record and supporting documentation. Those two areas alone accounted for about $9.3 billion of the total $12.6 billion in improper payments. Another $2.1 billion came from documentation discrepancies. The highest percentage of improper claims, 39%, or about $4.9 billion, was attributed to hospitals. Next highest were physicians (26%) and home health agencies (13%).
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