CMS Failed to Flag Medicare Fee-for-Service Healthcare Fraud, Waste

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CMS did not use a method recommended by OIG for preventing payments to providers known to have high payment error rates.


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From 2014 to 2017, CMS had an improper payment rate of 60.7 percent, accounting for $3.5 million in healthcare fraud, waste, and abuse.

January 28, 2021 – The Centers for Medicare & Medicaid Services (CMS) and its contractors did not use Comprehensive Error Rate Testing (CERT) data to identify healthcare fraud or waste, according to a new Office of Inspector General (OIG) audit.

Data from the CERT program measures improper Medicare fee-for-service payments to providers. Previous OIG reports have recommended that CMS harness CERT data to determine error-prone providers and correct processes that contribute to these errors.

However, after reviewing CERT data from 2014 to 2017, the agency determined that CMS did not use the data to identify error-prone providers.

Of the $5.8 million reviewed by CERT, $3.5 million was an incorrect payment, making for an improper payment rate of 60.7 percent. OIG tracked these incorrect payments to 100 error-prone providers.

These providers had an error rate higher than 25 percent in each of the four CERT years analyzed and a total error amount of at least $2,500.

During the same time period, Medicare made $19.1 billion in FFS payments to those 100 error-prone providers.

In the audit, OIG recommended that CMS review this list of 100 error-prone providers and take action to reduce incorrect payments. This could include processes such as prior authorization, prepayment reviews, and postpayment reviews for these providers.

Like previous reports, OIG called on CMS to use annual CERT data to identify specific providers that have an increased risk of receiving improper payments. Additionally, OIG suggested CMS apply additional program integrity tools to monitor these providers.

CMS did not agree with OIG’s recommendations in written comments to the draft report.

“CMS disagreed with our methodology for identifying error-prone providers and suppliers. Additionally, CMS stated that it previously attempted to use CERT data to identify error-prone providers and suppliers but found that CERT data was ineffective for this purpose and discontinued the practice,” the agency said.

OIG reviewed CMS’s comments and maintained that its recommendations are valid in lowering improper payment rates.

“We maintain that CMS can improve its ability to detect these types of providers by using the provider-level CERT data along with its existing oversight efforts,” the OIG audit explained.

In recent years, aggressive corrective actions to reduce Medicare FFS improper payments in particular have led to less healthcare fraud, waste, and abuse. Data released in November of last year revealed that the Medicare FFS improper payment rate declined to 6.27 percent in fiscal year (FY) 2020 from 7.25 percent in FY 2019 leading to $15 billion in savings.

2020 was the fourth consecutive year that the Medicare FFS improper payment rate fell below 10 percent, CMS reported.

“President Trump made a clear commitment to protect Medicare for our seniors, and to do that we must ensure that fraud and abuse doesn’t rob the program of precious resources,” CMS Administrator Seema Verma said at the time of the data’s release.

“From the beginning this administration has doubled down on our commitment to protect taxpayer dollars and this year’s continued reduction in Medicare improper payments is a direct result of those actions,” Verma continued.

However, based on OIG’s CERT data review that revealed over $19 billion in improper Medicare FFS payments to error-prone providers, CMS has room for improvement in terms of reducing fraud, waste, and abuse in the healthcare industry.

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