New HHS audit shows decline in Medicare overpayments

By MATTHEW HAY

HHBR Washington Correspondent

WASHINGTON The Department of Health and Human Services (HHS; Washington) Office of Inspector General (OIG) reported last month that improper Medicare payments declined dramatically last year to the lowest error rate since the agency initiated comprehensive audits three years ago. Hospitals, physicians, and home health agencies accounted for more than 77% of the improper payments, with approximately 39% of the erroneous claims attributed to hospitals, 26% to physicians, and roughly 13% to home health agencies.

The error rate for FY98 was an estimated $12.6 billion. This compares with an error rate of $20.3 billion and $23.2 billion for FY97 and FY96, respectively. HHS credited the decline in improper payments to the Health Care Financing Administration’s (HCFA; Baltimore) anti-fraud and abuse initiatives, improved provider compliance with Medicare reimbursement rules, OIG outreach efforts emphasizing Medicare documentation requirements, and implementation of HCFA’s corrective action plan.

In a communication released last month, HHS asserted that because of "extensive evidence of abuse," home health was one of the "initial targets" of its anti-fraud efforts. HHS credited its moratorium on enrollment of new home healthcare providers in the Medicare program, which it implemented in September 1997, and its requirement that home health agencies post surety bonds of at least $50,000 before they can enroll or re-enroll in Medicare with helping to curb fraud. "With the new regulations in place," said HHS, "the moratorium was lifted in January 1998." The agency failed to mention that the surety bond requirement was subsequently lifted under intense pressure by Congress.

HHS reported that it has doubled the number of home health audits and increased claims review by 25%, increased survey frequency for "problem agencies," secured authority to exclude providers convicted of healthcare-related fraud, and established minimum capitalization requirements. The agency also noted the ongoing development of a prospective payment system (PPS) for home health agencies that includes "incentives to provide care efficiently and avoid unnecessary visits."

Last week, HHS announced a new national fraud and abuse initiative called "Who Pays? You Pay?" in conjunction with the Department of Justice and the American Association of Retired Persons (Washington). The new initiative features a toll-free number and encourages Medicare beneficiaries to call a toll free hotline (1-800-HHS-TIPS) if they suspect fraud or are not satisfied with the explanation they receive from a Medicare carrier regarding a claim.