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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Improper Fiscal Year 2000 Medicare Fee-for-Service Payments," (A-17-00-02000)

March 6, 2001

Complete Text of Report is available in PDF format (1.41 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This final report points out the results of our review of Fiscal Year (FY) 2000 Medicare fee-for-service claims. Based on our statistical sample, we estimate that improper Medicare benefit payments made during FY 2000 totaled $11.9 billion, or about 6.8 percent of the $173.6 billion in processed fee-for-service payments reported by the Health Care Financing Administration (HCFA). As in past years, these improper payments could range from inadvertent mistakes to outright fraud and abuse. Since we developed the first error rate for FY 1996, HCFA has closely monitored Medicare payments and has instituted appropriate corrective actions. The HCFA has also worked with provider groups to clarify reimbursement rules and to impress upon health care providers the importance of fully documenting services. Additional initiatives on the part of the Congress, HCFA, the Department of Justice, and the Office of Inspector General have focused resources on preventing, detecting, and eliminating fraud and abuse. All of these efforts, we believe, have contributed to reducing the improper payment rate by almost half from FY 1996 to 2000. However, continued vigilance is needed to ensure that providers maintain adequate documentation supporting billed services, bill only for services that are medically necessary, and properly code claims. These problems have persisted for the past 5 years. Our recommendations address the need for HCFA to sustain its efforts in reducing improper payments.