Undercutting healthcare providers' push for budgetary relief for fiscal 2001, a new government report said Medicare overpaid hospitals, physicians and others $13.5 billion in fiscal 1999 for a variety of reasons, including inappropriate or unnecessary care.
That's a jump of $900 million in improper payments to providers from the previous fiscal year.
Other reasons for the overpayments include reimbursement for noncovered services, incorrect coding and lack of documentation.
But HHS Inspector General June Gibbs Brown, who presented the report at a Senate hearing last week, dismissed the jump as "not statistically significant." She added: "It's really getting tough now (to reduce overpayments)."
That's a different tune than Brown sang last year, when improper Medicare payments to providers dropped to $12.6 billion in fiscal 1998 from $20.3 billion in 1997 (Feb. 15, 1999, p. 8). At that time, Brown and others credited the federal government's fraud-fighting efforts for the drop.
Nonetheless, the increase in erroneous Medicare payments could put a damper on hospitals' efforts to lobby for more relief from the Balanced Budget Act of 1997.
Providers got $16.1 billion in relief last year and want $25 billion more this year.
"It does affect (hospitals') case," said Sen. Tom Harkin (D-Iowa), the ranking Democrat on the Senate Appropriations HHS subcommittee, which held the hearing on provider overpayments. "I do believe they need some relief, but there are other areas that have to be dealt with (first)."
Among those issues, Harkin said, are a Medicare prescription drug benefit and a possible overhaul of the Medicare program.
However, hospitals weren't the ones taking the pounding at the subcommittee hearing, even though inpatient payment errors accounted for $3.6 billion, or 27%, of the overpayments last year.
"It's very clear that we need to target three areas: physicians, durable medical equipment suppliers, and home health agencies," said HCFA Administrator Nancy-Ann Min DeParle, who promised to send letters to all 7,000 physicians, 9,000 home health agencies and 128,000 DME supplier locations that participate in Medicare.
Physicians accounted for $3 billion, or 22%, of the overpayments, while home health and DME each accounted for about $1.8 billion.
In a written statement, American Medical Association immediate past President Nancy Dickey, M.D., who is still an AMA board member, called the HHS findings "irresponsible grandstanding."
"HCFA has become the IRS of the new millennium, issuing reams of complicated regulations but failing to offer physicians so much as a simple 800 number to call with questions," Dickey said.
HCFA said it had already contacted the AMA to tell the group that it planned to roll out such an 800 number sometime this year.
Harkin said he didn't appreciate the AMA's "head-in-the-sand approach. If anything is irresponsible, it's this letter from Nancy Dickey."
In related news last week, HHS received a "clean" audit opinion from its inspector general on its fiscal 1999 financial statements, signaling that the department's management and accountability have greatly improved.
In the past two years, HHS and most of its agencies have received "qualified" opinions, meaning that their financial statements were not completely in order.