Medicare's payment error rate was 9.3% in fiscal 2004, representing $19.9 billion in payments and down from 9.8% in fiscal 2003, CMS Administrator Mark McClellan said. The error rate was based on a review of 160,000 Medicare claims. McClellan said the CMS now was able to review data at a fiscal intermediary and carrier level to identify best practices among contractors as well as contractors with the worst rates. As a result, the agency should be able to cut the error rate to 4% within four years, he said.
Insufficient documentation was behind about 44% of identified errors. The other most frequent sources of errors were nonresponses to requests for medical records (30%), medically unnecessary services (17.2%) and incorrect coding (7.5%). The CMS was unable to determine what proportion of the error rate represented actual fraud, but McClellan said, "We are closer to getting a better answer." The CMS took over error-rate calculations from HHS' inspector general's office in 2003 and significantly expanded its claims review. Read more about the CMS' testing program. -- by Mark Taylor