Government auditors say Medicare tops improper payment list

CMS calculated that Medicare made $48 billion in improper payments out of the $516 billion it paid to physicians, hospitals and other health professionals in 2010. Medicare led a partial list of 70 federal programs in terms of bad payments; according to a July GAO report. Estimates for improper payments under the fee-for-service program totaled $34.3 billion, and Medicare Advantage made up the rest. Medicare payment errors often are the result of billing and administrative mistakes and not outright fraud. The four common reasons for payment being designated as improper: • Documentation for a service by a health professional was insufficient. • Services provided to a patient were not deemed reasonable and necessary. • Claims for services were coded incorrectly. • Services were billed with no documentation to support the claim. CMS has launched a number of financial management tools to help lower payment error rates, including recovery audit contractors operating in all 50 states. RACs identify overpayments and underpayments in the Medicare program and receive contingency fees based on the amount returned to Medicare. In the case of underpayments, contractors are compensated when money is recovered for physicians. Contractors recovered $237.8 million in overpayments and $35.7 million in underpayments between October 2010 and March 2011.