Medicare News
| For Immediate Release: | Contact: |
| Monday, February 28, 2000 | CMS Office of Public Affairs 202-690-6145 |
For questions about Medicare please call 1-800-MEDICARE or visit www.medicare.gov. |
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MEDICARE TO MEASURE ERROR RATES OF PRIVATE CONTRACTORS
Further strengthening its oversight of the private companies that pay and process Medicare claims, the Health Care Financing Administration today announced an initiative to measure and track the payment accuracy for each of those companies.
In 1996, Medicare began using annual audits to determine a national error rate and has since reduced its error rate significantly. The new comprehensive error-rate testing program will establish baselines to measure each contractor's progress toward correctly processing and paying its share of the nearly 1 billion Medicare claims filed each year. Medicare will use the results to target efforts to pay correctly for services provided to its nearly 40 million beneficiaries.
"Our private contractors must ensure that Medicare pays claims correctly, and these new error rates will measure their performance and guide our oversight," HCFA Administrator Nancy-Ann DeParle said. "The results will help contractors improve the accuracy of their payments and give Medicare a valuable new weapon in our efforts to reduce waste and abuse."
The comprehensive error rates are the latest step in HCFA's on-going efforts to ensure effective management of these private contractors. Since Medicare was created in 1965, HCFA has been required by law to rely on private insurance companies to process Medicare claims. HCFA began a new initiative to strengthen its oversight of contractors in 1998, including:
- A new, high-level position to coordinate contractor oversight nationally, filled by a physician with experience fighting fraud, waste and abuse.
- A new national contractor performance evaluation strategy to ensure consistency and to focus on key contractors and high-risk areas.
- National teams to evaluate contractors' fraud and abuse efforts and other key functions, using standardized reporting and evaluation protocols.
- The development of additional, measurable standards, which will allow for more targeted reviews of specific areas of contractor performance.
HCFA is also amending its contracts with these companies to ensure that they have plans to correct any financial-management issues raised in audits or other reviews.
The error-rate project also builds on the HHS Inspector General's efforts to measure the accuracy of Medicare's overall payments through its annual Medicare audit, which began in 1996. Since then, Medicare has increased its audits and medical reviews, worked with health-care providers to ensure appropriate documentation, and strengthened its education and outreach efforts. As a result, Medicare has significantly reduced its error rate.
HCFA will start its error-rate initiative this summer by determining error rates for its four Durable Medical Equipment Regional Carriers. These companies process nearly 50 million claims each year for medical equipment and supplies for beneficiaries nationally. Within a year, HCFA expects to perform similar evaluations for all its claims-processing contractors.
For each contractor, Medicare will conduct reviews for a statistically valid sample of claims and determine whether the contractor paid the claim accurately. The review will determine whether health-care providers were underpaid or overpaid for the sampled claims. The results will reflect not only the contractor's performance, but also the billing practices of the health-care providers in their region.
The results will lead to a contractor-specific error rate that Medicare will track to promote improvements. Contractors would develop targeted corrective action plans to reduce payment errors through provider education, claims review and other activities.
"These error rates will guide claims-processing contractors as they work to improve their payment accuracy much as the Inspector General's audits have helped guide our efforts," DeParle said. "Ultimately, this will bolster our efforts to ensure Medicare claims are paid promptly and accurately."
HCFA will assign the work this spring to one of 13 special contractors selected last year specifically to help protect Medicare against waste, fraud and abuse. HCFA hired these special contractors, which have experience conducting audits, medical reviews and other program-integrity activities, under new authority obtained in the Health Insurance Portability and Accountability Act of 1996.
