Centers for Medicare & Medicaid Services' Use of Medicare Fee-for-Service Error Rate Data To Identify and Focus on Error-Prone Providers

The Improper Payments Information Act of 2002 requires the head of a Federal agency with a program that may be susceptible to significant improper payments to report to Congress the agency's estimate of the improper payments. During our audit period, fiscal years (FY) 2005 through 2008, CMS used two programs to estimate improper Medicare fee-for-service (FFS) payments: the Hospital Payment Monitoring Program (HPMP) and the Comprehensive Error Rate Testing (CERT) program.

We found that CMS and its contractors did not use historical HPMP and CERT error rate data to identify and focus on error-prone providers. We defined "error-prone providers" as providers that had at least one error in each of the 4 years of our audit period. Although payment contractors developed corrective actions based on the HPMP and CERT error rate data, they typically did not focus on error-prone providers for review and corrective action.

Using the reported error rate data for FYs 2005 through 2008, we identified 740 error-prone providers. Specifically, an analysis of the HPMP error rate data disclosed that 554 providers (21 percent of all HPMP providers with at least 1 claim sampled in each of the 4 years) accounted for 59 percent of the dollars in error for those providers. A similar analysis of the CERT error rate data for the same period disclosed that 186 providers (1.81 percent of all CERT providers with at least 1 claim sampled in each of the 4 years) accounted for 25 percent of the dollars in error for those providers. Focusing on error-prone providers for corrective action and repayment of improper payments could improve the effectiveness of CMS's efforts to reduce improper payments.

We recommended that CMS (1) use available error rate data to identify error-prone providers, (2) require error-prone providers to identify the root causes of claim errors and to develop and implement corrective action plans, (3) monitor provider-specific corrective action plans, and (4) share error rate data with its contractors to assist in identifying improper payments. CMS concurred with our recommendations.