CMS Says Improper Medicare Fee-for-Service Payments Are Down $15 Billion Since 2016

CMS is claiming that its “aggressive corrective actions” have saved taxpayers over $15 billion in improper Medicare Fee-For-Service (FFS) payments over the past four years. According to the November 16 report, the FFS improper payment rate has significantly declined under the Trump administration and has been below 10 percent for four straight years since 2016.

Home Health and SNF Initiatives Drive Savings

According to the CMS report, the FY 2020 Medicare FFS improper payment rate was 6.27 percent, representing $25.74 billion in improper payments, as compared to a rate of 7.25 percent accounting for $28.91 billion improper payments in FY 2019, and marking the fourth straight year the rate has been below the 10 percent threshold mandated by the Payment Integrity Information Act of 2019. CMS cites progress in the following areas as the principle driver of this year’s decline in Parts A and Part B:

  • Home health improvements: Initiatives to clarify documentation requirements and educating providers via the Targeted Probe and Educate program resulted in a $5.9 billion decrease in estimated improper payments from FY 2016 to FY 2020; and
  • Skilled nursing facility claims: A policy change related to the supporting information for physician certification and recertification for skilled nursing facility services helped drive a $1 billion reduction in estimated improper payments in the last year.

CMS Pats Itself on the Back

The CMS report isn’t shy about claiming credit for these positive developments, saying they were the result of the agency’s “steadfast efforts to identify the root causes of improper payments, implement action plans to reduce and prevent improper payments, and extend the Agency’s capacity to address emerging areas of risk through work groups and interagency collaborations.”

The CMS Strategy

To be fair, it’s not just bluster. As the report notes, CMS has developed a five-pillar strategy to reduce the FFS improper payment rate:

  1. Stop the Bad Guys

CMS works with law enforcement agencies to crack down on “bad actors” who have defrauded federal health programs.

  1. Prevent Fraud Before It Happens

Rather than the expensive and inefficient “pay and chase” model, CMS prevents and eliminates fraud, waste and abuse on the front end by proactively strengthening vulnerabilities before they’re exploited.

  1. Mitigate Emerging Programmatic Risks 

CMS is exploring ways to identify and reduce program integrity risks related to value-based payment programs by looking to experts in the healthcare community for lessons learned and best practices.

  1. Emphasize the Carrot Over the Stick

To assist rather than punish providers who make good faith claim errors, CMS is reducing burden on providers by making coverage and payment rules more easily accessible to them, educating them on CMS programs, and reducing duplicative or unnecessary documentation requirements.

  1. Leverage New Technology

CMS is working to modernize its program integrity efforts by exploring innovative technologies like artificial intelligence and machine learning, which could allow the Medicare program to review compliance on more claims with less burden on providers and less cost to taxpayers.


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