Medicare Compliance & Reimbursement

But Medicare does a better job of collecting documentation from providers.

The federal government spent $7 billion less in improper payments in 2005 than in 2004, according to the Government Accountability Office (GAO). And this reduction was mostly thanks to a reduction in wasteful Medicare spending.

The catch: The GAO says this improvement mostly came from a change in how Medicare estimated improper spending, not from any "improved payment controls."

"When providers do not submit documentation to justify payments received, these payments were counted by HHS as erroneous," the GAO notes.

But the fact that the Department of Health & Human Services (HHS) has made greater efforts to obtain documentation from providers doesn't mean that errors have decreased. Medicare has done a better job of educating providers about the Comprehensive Error Rate Testing program and the importance of responding to questions.

HHS still blamed Medicare for the biggest part of its improper payments, with an estimated $12.1 billion in waste for 2005.

HHS hasn't yet figured out how to report improper spending in Medicare managed care, according to the GAO's report, "Improper Payments: Agencies' Fiscal Year 2005 Reporting Under The Improper Payments Act Remains Incomplete" (GAO-07-92).