CMS Should Address Documentation Requirements for Identifying Improper Payments
Published: April 11, 2019
According to GAO analysis, CMS needs to determine the necessary documentation to identify improper payments in the Medicare and Medicaid programs.
In late March, GAO released a report entitled, “MEDICARE AND MEDICAID: CMS Should Assess Documentation Necessary to Identify Improper Payments.” GAO found that Medicare and Medicaid have different documentation requirements for some of the same health services, contributing to substantially different estimated error rates.
Medicare and Medicaid continue to remain on GAO’s High Risk List, due in large part to the high rate and amount of improper payments each year. In FY 2018, Medicaid improper payments were estimated to total $36.2 billion and Medicare Fee-for-Service (FFS) improper payments totaled nearly $31.6 billion. These numbers equate to 9.8% and 8.1% of respective total program outlays.
GAO’s study covered the period of FY 2017 when estimated Medicaid FFS improper payments were $41.2 billion and Medicare FFS improper payments were estimated at $36.2 billion. For this time period, Medicare FFS had an estimated $23.2 billion in improper payments due to insufficient documentation, while Medicaid FFS only had $4.3 billion.
Because most of Medicare’s FFS improper payments are due to insufficient documentation, GAO examined Medicare and Medicaid documentation requirements and factors that contribute to insufficient documentation, and the effectiveness of federal Medicaid reviews in providing states with actionable information.
Medicare and Medicaid FFS improper payments are estimated by CMS, in part, by conducting reviews of provider-submitted medical record documentation. These reviews are aimed at determining whether the services were medically necessary and complied with coverage policies. Payments for services without sufficient documentation are considered improper payments.
The amount and type of documentation necessary for Medicaid FFS versus Medicare FFS payments vary greatly, mainly due to state administration of Medicaid and the varying documentation requirements from the states. According to GAO’s report, “Although Medicare and Medicaid pay for similar services, the same documentation for the same service can be sufficient in one program but not the other.”
Because of the variation in program documentation requirements, GAO poses the question as to “how well the programs’ documentation requirements help identify causes of program risks.” GAO believes that medical reviews may not be providing necessary information to help direct CMS program integrity efforts or identify and address program risks in Medicare and Medicaid. “Augmenting medical reviews with other sources of information, such as state auditor findings, is one option to better ensure that corrective actions address program risks,” GAO stated.
GAO made the following recommendations to CMS:
- CMS should assess and ensure the effectiveness of Medicare and Medicaid documentation requirements
- CMS should take steps to ensure Medicaid’s medical reviews effectively address causes of improper payments and result in appropriate corrective actions
- CMS should take steps to minimize the potential for Payment Error Rate Measurement (PERM) medical reviews to compromise fraud investigations.
- CMS should address deterrents for state Medicaid agencies to notify the PERM contractor of providers under fraud investigation.