The decline in Medicare fee-for-service overpayments to healthcare providers has faltered, and one congressman has challenged HCFA to "turn off this spigot of waste."
In fiscal 2000, Medicare erroneously paid out an estimated $11.9 billion, about half of the $23.2 billion in improper payments for fiscal 1996, the first year that HHS' inspector general's office produced what has become an annual audit report. Most of the improvement came in fiscal 1998, when the payment-in-error number dropped to $12.6 billion (See chart).
Officials said the inspector general's office can't conclude that this year's estimate is meaningfully different from estimates in fiscal 1998 or 1999, when overpayments were $12.6 billion and $13.5 billion, respectively.
Senate Finance Committee Chairman Charles Grassley (R-Iowa) renewed his call for Medicare reform (See story, p. 12). Grassley called for $50 million to fix Medicare's outdated accounting system, a move he said is important in reducing improper payments.
The report does not distinguish between improper payments attributable to honest mistakes and those attributable to fraud. The bulk of improper payments in 2000-$5.1 billion-resulted from Medicare's paying for medically unnecessary services. Other errors stemmed from Medicare's paying for services not supported by documentation ($4.3 billion); coding errors ($1.7 billion); and Medicare's paying for noncovered services combined with miscellaneous errors ($700 million).
"HCFA has made significant improvement toward ensuring proper payment for medical services, but more must be done," HHS Secretary Tommy Thompson said in a written statement commenting on the report.
According to the report, the drop in overpayments to providers stems in part from HCFA's work with provider groups to clarify reimbursement rules and stress the importance of documentation.
Last year, then-HHS Inspector General June Gibbs Brown said at a Senate hearing: "It's really getting tough now (to reduce overpayments)."
In this year's report, acting Inspector General Michael Mangano did not indicate that HCFA had hit a limit with lowering erroneous payments.
"Continued vigilance is needed to ensure that providers maintain adequate documentation supporting billing services, bill only for services that are medically necessary and properly code claims," Mangano said in the report. "These problems have persisted for the past five years."
The $11.9 billion in improper payments represents 6.8% of the $173.6 billion in fee-for-service payments that Medicare made in fiscal 2000. In 1996, Medicare's payment error rate was about 14%.
HCFA's error-rate goal for the year was 7%. Its goal for 2002 is 5%.
"With all its available resources, the government should be able to stop this milking of the (U.S. Department of the) Treasury," Grassley said in a written statement about the report. "We could pay for a lot of prescription drugs for older Americans with $11.9 billion."
Thompson said in his statement, "I am committed to ensuring that the department invests in the technology and systems needed to make these improvements."
Separately last week, the House and Senate considered legislation that would allow physician practices and other providers to return Medicare overpayments within one year without fear of an investigation.
Sens. Frank Murkowski (R-Alaska) and John Kerry (D-Mass.) introduced the Medicare Education and Regulatory Fairness Act of 2001; Reps. Pat Toomey (R-Pa.) and Shelley Berkley (D-Nev.) are sponsors of the House version of the bill. Similar legislation died in committee last year in both the House and Senate.