Focus on error-prone contractors to find improper payments, HHS IG says

As the White House and federal agencies seek to reduce improper payments, the inspector general of the Health and Human Services Department has an idea about  where to find more of them: among error-prone contractors.

The 2 percent of Medicare providers most prone to errors may be responsible for as much as 25 percent of the dollars lost to improper payments, according to a new report from HHS Inspector General Daniel Levinson.

The inspector general’s office surveyed 10,000 Medicare providers from fiscal 2005 to 2008 and identified 186 who had the highest rate of errors. That group was responsible for 25 percent of the dollar amount of improper payments for the entire sample, according to the Oct. 13 report.

If those results can be applied to all Medicare contractors, it suggests that the Centers for Medicare and Medicaid Services (CMS) ought to be looking much more closely at doctors and hospitals with the highest error rates when it seeks to reduce improper payments, the IG report concluded.

“Focusing on error-prone providers for corrective action and repayment of improper payments could improve the effectiveness of CMS’ efforts to reduce improper payments,” Levinson wrote in the report.

Provider action, including improper coding and medically-unnecessary services, caused most of the $44.1 billion in improper payments that CMS reported for fiscal 2005 through 2008. Another $47 billion in Medicare improper payments was lost in fiscal 2009 alone, according to a recent White House report.

Levinson recommended that CMS:

• Use available error rate data to identify error-prone providers
• Require error-prone providers to identify the root causes of claim errors and develop corrective actions
• Monitor the corrective action plans by providers and
• Share error rate data with its contractors.

CMS officials said they agreed with the recommendations and intend to reduce improper payments by 50 percent by 2012.