Improper payments for Medicare fell in 2019, but soared for Medicaid and CHIP

SHELBY LIVINGSTON  November 19, 2019

The rate of improper Medicare payments made by the CMS continued to fall in 2019, hitting its lowest point since 2010, the agency said this week.

The CMS paid out about $28.91 billion in improper payments in fiscal 2019, or about 7.25% of fee-for-service Medicare claims paid during the year. That's down from about $31.6 billion in 2018, or about 8.12% of Medicare claims.

Fiscal 2019 is the third consecutive year that the rate of improper payments has been below 10%, according to the CMS, which attributed the declining rate to its "aggressive program integrity measures." The reduction translates to savings for taxpayers, the agency said.

Improper payments include fraudulent claims, payments distributed to the wrong recipient or for the wrong amount, payments with insufficient documentation, and those when the recipient uses the funds improperly. Improper payments could include overpayments or underpayments.

"At a time when Medicare's ballooning costs are threatening the long-term sustainability of the program, President Trump is taking action to protect the program," CMS Administrator Seema Verma said in a statement. "Every dollar spent inappropriately is one that should have been used to benefit patients. Under President Trump's leadership CMS is pulling every lever at its disposal to safeguard precious resources and direct them to those who truly need them — both today and in the future."

The agency also reported that the rates of improper payments in Medicaid and the Children's Health Insurance Program were much higher than in Medicare. National improper payments in 2019 were $57.36 billion for Medicaid, or a rate of 14.9%, and $2.74 billion for CHIP, or 15.8%. That's up from $36.25 billion, or 9.8%, in Medicaid and $1.39 billion, or 8.6%, in CHIP.

But the 2019 and 2018 improper payment rates in those programs are not comparable because of a dramatic change in the methodology the CMS used. It explained that it started incorporating eligibility reviews in measuring the improper payment rates in Medicaid and CHIP this year after the Obama administration paused the payment error-rate measurement eligibility reviews from 2014 to 2018 as states were implementing new rules under the Affordable Care Act.

The 2019 improper payment rates for Medicaid and CHIP include 17 states reporting for the updated eligibility component. The high level of eligibility errors observed was mostly due to insufficient documentation to verify eligibility, the CMS said, but could also include CHIP claims where the beneficiary wasn't eligible.

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