Healthcare Business News
CMS Administrator Marilyn Tavenner

$543M in illegitimate Medicare claims uncollected by CMS, report says

By Joe Carlson
Posted: July 2, 2013 - 12:01 am ET

A new report says the federal government in 2010 identified more than half a billion dollars in illegitimate Medicare claims that it never collected.

That year, the most recent year for which data are available, the CMS classified $543 million as “currently not collectible” (CNC) debt, which includes Medicare overpayments made to bankrupt, hard-to-find and out-of-business providers, according to a report out today from HHS' inspector general's Office of Evaluation and Inspections. CMS officials say these are some of the most difficult types of overpayments to collect.

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All told, CMS identified $9.6 billion in Medicare overpayments to healthcare providers in 2010, and got most of that back. In general, the office tends to get about 80% of the identified overpayments back before moving to collections, CMS Administrator Marilyn Tavenner wrote in response to the Office of Inspector General's audit.

“Outside this class of overpayments, CMS' debt collection efforts have been very effective,” Tavenner wrote.

Not so much with CNC debt, though. The vast majority of CNC debt is probably never collected, although it's tough to say why because limited information was available on the types of providers involved or the Medicare payment processing contractors that were responsible.

Looking at the seven private companies processing Medicare payments whose work was examined by the auditors, the OIG's office found that 97% of the overpayments that were eventually classified as CNC had not been recovered within a year's time.

And 2010 was a relatively good year for collecting debt. In 2007, CMS recorded $646 million in CNC debt, in 2008 $919 million, and in 2009 $897 million.

The private Medicare contractors that process CMS' bills said that while they issue formal demand letters for debt, the CMS often provides incorrect addresses or names on file. The contractors said many of the letters are returned to sender because the provider has gone out of business. Many hospitals also reject the letters because they want them sent to health system headquarters instead.

The auditors recommended that CMS make sure to provide correct addresses, and also tie the providers' information to a unique tax identification number. That would allow the government to deduct past payments for illegitimate claims against new claims. That is how the CMS collects most of its overpayments.

Follow Joe Carlson on Twitter: @MHJCarlson

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