Medicare Doles Out $45B in Improper Payments

November 25, 2014

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Source: MSN Money

It’s not news that the federal government has a serious issue with improper payments. During each of the last five years, agencies have doled out more than $100 billion in erroneous payments from various major benefit programs. Even knowing this, the problem only seems to be getting worse.

The latest program to be flagged by federal auditors is Medicare’s Fee for Service – which has seen a steady uptick of improper payments over the last five years.

This year, the program’s error rate jumped to 12.7 percent, from 10.1 percent last year, according to a new report from the Department of Health and Human Services Inspector General.

The auditors said that this year alone, Medicare’s Fee for Service program made about $45 billion in improper payments. That’s up significantly from $28.8 billion in 2011, when the error rate was 8.6 percent.

WHY THIS MATTERS

Improper payments are a consistent and expensive problem plaguing the federal government. Without figuring out how to curb the error rate for major benefit programs like Medicare and Medicaid, the government will continue losing billions of tax dollars a year.

Under Medicare’s Fee for Service model, doctors are paid for each treatment they provide to patients. The program covers Medicare (Part A) or “hospital insurance” as well as supplementary medical insurance (Part B), according to the Health and Human Services Department. The improper payments tend to happen when a hospital bills Medicare for something that is not covered under the program, or if they overbill Medicare.

Under the Improper Payment Information Act, Medicare was supposed to curb the program’s payment error rate to 8.3 percent. Instead, the error rate has gone up.

Auditors said the program violated the Improper Payment Information Act of 2002, which is regulated by the Office of Management and Budget. Still, it doesn’t appear that there’s much OMB can do to discipline the agency for failing to meet its mark.

And it’s not just Fee for Service. HHS also struggles with high error rates for other major programs as well including Medicaid and Foster Care.

“Two other programs, Medicaid and Foster Care, also reported error rates that increased from the error rates reported last year,” the IG said. In total, improper payments for seven HHS programs cost about $78 billion in 2014, up from $65.3 billion last year. That represents a 20 percent increase over one year, The Washington Examiner noted.

There is some good news, though. According to the IG, HHS ultimately recovered about 88 percent of the identified improper payments—up from 79 percent in 2012. So, they’re making more mistakes, but fixing more too.

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