What you need to know about the forces reshaping our industry.


November 20, 2019

Improper Medicare payments dip to 9-year low, HHS says

Daily Briefing

    HHS on Monday announced the rate of improper Medicare fee-for-service (FFS) payments in fiscal year (FY) 2019 was at the lowest point since FY 2010.

    Cheat sheets: Medicare payment programs 101

    The announcement comes after CMS Administrator Seema Verma last month announced a five-part strategy to overhaul how the agency handles improper payments, including using machine learning to improve compliance reviews. In addition, CMS in September finalized a rule that provides the agency with more authority to prevent fraud by rejecting or revoking a provider's or supplier's enrollment in CHIP, Medicare, and Medicaid if they are affiliated with organizations that have had their enrollment revoked because of fraud, waste, or abuse.

    CMS sees decline in improper Medicare FFS payments

    CMS said the FY 2019 improper Medicare FFS payment rate decreased to 7.25%, down from 8.12% in FY 2018. According to CMS, FY 2019 was the third consecutive year the agency's improper Medicare FFS payment rate was below 10%:

    CMS said the decline in the improper Medicare FFS payment rate from FY 2017 to FY 2019 represented a $7 billion decrease in estimated improper payments:

    CMS said the decline largely was driven by decreases in improper payment claims for:

    • Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS);
    • Home health care services; and
    • Other services covered under Medicare Part B, such as ambulance services, lab tests, physician office visits, and more.

    In particular, CMS said the improper payments for:

    • DMEPOS decreased by $1.29 billion from FY 2016 to FY 2019 as a result of a number of corrective actions;
    • Home health care services decreased by $5.32 billion from FY 2016 to FY 2019 as a result of policy clarifications and the agency's Targeted Probe and Educate program; and
    • Other Medicare Part B services decreased by $1.82 billion from FY 2018 to FY 2019 as result of actions to clarify and simplify requirements for billing CMS under the Trump administration's Patients Over Paperwork initiative.

    CMS said improper payments for Medicare Part C, known as Medicare Advantage, and Part D also declined from FY 2018 to FY 2019, but the agency noted that improper payments for CHIP and Medicaid increased:

    CMS said the increase in CHIP and Medicaid improper payments in part was driven by a change in how the agency calculates the payments.

    Further, CMS said the agency in FY 2016 assessed payments related to Affordable Care Act exchange plans, such as advanced premium tax credits (APTCs), and found that APTCs are "susceptible to significant improper payments." CMS said it "conducted development and piloting activities for the APTC improper payment measurement program" between FY 2017 and FY 2019, and "will continue these activities in FY 2020."


    Verma said, "Our progress on improper payments is historic, but there's more work to be done." She noted, "CMS has taken a multifaceted approach that includes provider enrollment and screening standards to keep bad actors out of the program, enforcement against bad actors, provider education on our rules and requirements, and advanced data analytics to stop improper payments before they happen. These initiatives strike an important balance between preventing improper payments and reducing the administrative burden on legitimate providers and suppliers" (King, FierceHealthcare, 11/18; Gooch, Becker's Hospital CFO Report, 11/18; HHS release, 11/18; CMS fact sheet, 11/18).

    Have a Question?


    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.