CMS Announces $31.2 Billion in Improper 2023 Payments

Sarasota, FL (WorkersCompensation.com) – Earlier this month, the Centers for Medicare & Medicaid Services (CMS) released their findings of Fee-for-Service claims audits conducted this year. 

Last year, CMS estimated that the rate of improper payments was 7.46 percent, which is below the acceptable error rate of 10 percent set by Improper Payments Information Act of 2002. This year saw a small improvement at an estimated rate of 7.38 percent, which is the seventh consecutive year that CMS has met the benchmark. 

The 7.38 percent equates to $31.2 billion in estimated overpayments made to state, contractor, or provider entities. Improper payments made under Medicare Part C totaled 6.01 percent, equating to $16.6 billion. While CMS made significant changes to methodology in reporting, they saw no significant changes in payment rate. The total improper payments made under Part D is estimated at 3.72 percent, equating to $3.4 billion. 

Collectively for years 2021 through 2023, the improper payment rate was 8.58 percent, totaling $50.3 billion. CMS states that this is a significant decrease from 15.62 percent reported in 2022.

Auditors found that for Medicaid, 82 percent of the improper payments were due to insufficient documentation. CMS attributes those findings to cases where states or providers missed an administrative step, and not necessarily cases of fraud or abuse. 

The findings for Part C and Part D were similar. For Part C, the majority of improper payments were the result of missing or illegible documentation, and lack of supporting documentation for diagnosis. For Part D, auditors found the majority of overpayments were due to missing or invalid documentation, including missing authorizations. Additionally, auditors found drug discrepancies, such as a different active ingredient as the one prescribed, and discrepancies in drug pricing. 

This past year, the OIG has made a concerted effort in reviewing Medicare administrators, resulting in significant audit findings and overpayments. Earlier this month, an OIG audit found that Noridian Healthcare Solutions had reopened and corrected cost reports resulting in significant overpayments to Medicare providers even after an additional review. Auditors found that 141 audited cost reports had been reopened. Of those, 84 had been reopened based on new information, or at the request of CMS. 

There were 12 additional cost reports that had been reviewed by Noridian and their auditors, but the OIG still found obvious errors that were not in line with Medicare requirements, or that were inconsistent with the law. In this set of cost reports, the OIG auditors found an additional $11.3 million in net overpayments to providers. Based on their findings, the OIG made three recommendations: develop and provide additional education regarding criteria and requirements, develop procedures that allow for adequate time for review, and develop protocols so that reviewers are better qualified to detect incorrect audit adjustments. 

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