White House cites progress on payment errors

Various Medicare and Medicaid auditing initiatives have sharply lowered erroneous excess payments under the programs over the past three years, according to the Obama administration, and new initiatives will lower such mistaken spending further.

Federal waste reduction measures have led to Medicare’s overall error rate falling to 8.6% in 2011 from 10.2% in 2010, federal officials announced today. Specifically, Medicare’s fee-for-service error rate fell to 8.6% from 9.1% last year, and Part D reported a first-time composite error rate of 3.2%, well below the government average.

The reduced error rate resulted in Medicare avoiding about $7 billion in erroneous fee-for-service payments and $5 billion in Part C erroneous payments.

Additionally, the error rate for Medicaid fell to 8.1% in 2011 from 9.4% in 2010, which avoided about $4 billion in erroneous payments.

HHS Secretary Kathleen Sebelius also said her department will launch four new pilot projects to further reduce the programs’ error rates and cut waste and fraud, including an expanded use of Recovery Audit Contractors. The change will allow the private companies to screen certain hospital payments before they are issued.

Another pilot project will allow some hospitals to resubmit outpatient claims mistakenly submitted as inpatient treatment. Such incorrect billing of services is a leading cause of payment errors in the Medicare program, according to an administration statement, and wastes time and money in appeals.