Medicare Compliance & Reimbursement

‘Two Midnight’ rule contributes to a decrease in 2016’s improper payment rate.

The news is rife with stories of practices billing Medicare improperly. But on the upside, some measures instigated by CMS to assist providers and lower the improper payment rates are working.

The 2016 Medicare Fee-for Service (FFS) improper payment rate dropped to 11.2 percent from 12.1 percent in 2015, the second year in a row with declines, according to the latest Comprehensive Error Rate Testing (CERT) report, which CMS released last month.

Background: “It is important to note that the improper payment rate does not measure fraud,” CMS reminded. “It estimates the payments that did not meet Medicare coverage, coding, and billing rules.”

Medicare Will Expect Refunds

A majority of the mistakes were discovered as overpayments — meaning that CMS identified $41.8 billion that was paid out by Medicare in error, and chances are high that MACs will be asking for much of that money back, if they haven’t already. CMS also noted that it still owes $1.2 billion to providers who were underpaid in 2016. This CERT data is troubling because downcoding continues to be a major problem for Medicare providers despite measures to improve it.

To create the CERT report, CMS reviewed 49,997 claims, including Medicare Part A — with and without the Acute Care Hospital Inpatient Prospective Payment System (IPPS), Part B, and DME, indicates the CMS data. After checking the details of the claims at length, “medical review professionals” determined which had no documentation, insufficient documentation, incorrect coding, or reflected a medically unnecessary service.

Reminder: “If the medical record does not support the service(s) billed, CMS can certainly recoup the funds paid to the provider,” explains attorney John E. Morrone, Esq, a partner at Frier Levitt Attorneys at Law in New York.

Consider Two Measures That Made a Difference

Actions implemented to counteract incorrect coding and billing helped to improve the FY 2016 improper payment rate — and hold promise for marked decreases in future years.

Two Midnight rule: CMS saw its overall Medicare FFS payment accuracy rate go up to 89.0 percent for CY 2016, and the CERT report suggests it’s due in part to corrective measures put in place to assist practices with coding and billing. Also, the “Two Midnight” rule factored greatly and “led to a reduction in improper payments for inpatient hospital claims, reducing the inpatient hospital claims improper payment rate for those services from 6.2 percent in 2015 to 3.8 percent in 2016,” the data highlighted.

Home health’s impact: Plus, the significant decrease in home health’s improper payment rate from 59.0 percent in 2015 to 42.0 percent in 2016 helped to lower the overall impact. “A policy revision to the home health face-to-face encounter requirements contributed to this decrease,” indicated the CERT report.

Review the Breakdown

The 11.2 percent improper payment rate outcome held few surprises with Medicare Part A (without hospital IPPS) at 5.9 percent error rate while Part B had the next largest impact at 2.9 percent. Part A (with IPPS) was third at 1.4 percent of the overall rate and DMEPOS rounded out the group at a 1.0 percent error rate.

Documentation: Insufficient documentation was the top reason attributed to the improper payment rate with an overall impact of $26.8 billion incorrectly paid out. Medical necessity was a distant second at $8.9 billion. Part A clinicians had a significantly higher error rate than Part B providers when it came to insufficient documentation, with Part A facing a 4.2 percent error rate as compared to 2.0 percent in Part B. Home health agencies accounted for much of the rise in Part A’s error rate, which is more than double of Part B’s, costing Medicare nearly $7.4 billion in improper payments for insufficient documentation alone.

Incorrect coding: Part B providers rated the highest among incorrect coding errors, with a 0.7 percent error rate, which topped the Part A and DME rates. Not all of these errors reflected overpayments to practices — in some cases, doctors actually shorted themselves by coding incorrectly — with Part B and Part A (with IPPS) tied for first, underpaying themselves around 0.6 percent of the time.

Texas and California Lead the Pack

Texas took the top spot with the highest percentage of improper payment rates for FY 2016 at 17.5 percent. California and Georgia followed closely at 13.6 percent, but the latter garnered the highest improper payment amount, even trumping Texas, at a little over $479 million. Illinois followed with the rate of 13.1 percent while Florida and Pennsylvania brought up the rear at 12.9 percent improper payment rate.

Medicare providers in California and New York shorted themselves at epic levels, ringing in around $128.8 million and $114.2 million respectively. Ohio, however, had the highest percent of improper underpayments at 0.8 percent totaling $105.9 million.

Tip: If the CERT report teaches providers anything, it’s the idea that you can’t just code anything or ignore proper documentation requirements and see what your MAC will pay you. “You’re breaking the rules,” warns Barbara J. Cobuzzi, MBA, CPC, CENTC, COC, CPC-P, CPC-I, CPCO, vice president at Stark Coding & Consulting, LLC, in Shrewsbury, New Jersey. “If you code everything you’re not following the rules, you’re throwing it at the wall and seeing what will stick. That could hurt you and that could hurt them. You could not necessarily be catching everything payable to you, and you’ll definitely get into trouble forthe issue.”

Resource: To view the Medicare Fee-for-Service 2016 Improper Payment Rate Report in its entirety, visit www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/Downloads/MedicareFeeforServi­ce2016ImproperPaymentsReport.pdf.