Medicare Compliance & Reimbursement

Senate fraud hawk chides CMS with tinkering with error figures. 

Health care providers shouldn't jump to the conclusion that the fact the Medicare payment error rate is holding steady means the campaign against health care fraud and abuse will ease up anytime soon.

The Centers for Medicare & Medicaid Services claims the error rate dropped to 5.8 percent in 2003, a touch lower than the rate for the previous two years. But don't tell that to Senate Finance Committee Chair Charles Grassley (R-IA). In his opinion, thanks to an adjustment CMS and its error-rate contractor AdvanceMed made to the 2003 data, the claimed 5.8 percent rate is "NOT statistically valid, as it had been in the previous six years" when the OIG computed it, but "a guesstimate."

Unadjusted, CMS found the error rate to be 9.8 percent - $19.6 billion - 3.5 percent higher than last year and the highest rate since 1997, just one year after the Department of Health and Human Services and Congress began assiduous efforts to bring down the number of improper payments.

However, non-responding providers are included as erroneous payments in the survey. And in this first year of CMS's takeover of the analysis - using a sample size of 120,000 claims, rather than the 6,000 claims annually analyzed by HHS Office of Inspector General - "a significant non-response problem developed," with the result that over half of the 9.8 percent unadjusted rate was attributable to non-response, says the agency.

CMS chalked up the non-response rate to one-time glitches - including providers' misconceptions about new privacy regulations, suspicion of record requests coming from an unfamiliar source, and limitations in the CMS shared-data network - and adjusted the numbers to "provide a more meaningful estimate." The agency assumed that, without the unusual factors, this year's non-response rate would be in the ballpark of the average rate from 1996 through 2002 and adjusted this year's figures accordingly.

 In an irate Nov. 14 letter to Principal Deputy IG Dara Corrigan, Grassley - who opposed switching the audit to CMS from the OIG - wrote that he's suspicious of the whole enterprise: "Today, CMS and AMC provided Congress with two Medicare error rates, one that is 'adjusted' and the other, which is not. CMS paid AMC over $5 million taxpayer dollars to obtain these results. It appears that the 'unadjusted' error rate of close to 10 percent was too high for CMS - almost 4 percentage points higher than the previous two years. So CMS reports that it adjusted that figure downward to the 5.8 percent figure."

Grassley wants Corrigan to ensure that next year's report will include only one error number, not two, and to monitor CMS's tinkering with the error-counting program, including its plans to decrease the non-response rate.