Review of CERT Errors Overturned Through the Appeals Process for Fiscal Years 2009 and 2010

CMS established the Comprehensive Error Rate Testing (CERT) program to produce a national Medicare fee-for-service (FFS) error rate. An error is the difference between the amount that Medicare paid to a health care provider and the amount that it should have paid. Using the results of the CERT program, CMS annually submits to Congress an estimate of the amount of improper payments for Medicare FFS claims, pursuant to the Improper Payments Information Act of 2002. Providers have the right to appeal claim payment denials made by the CERT review contractor. Appeal decisions made after the cutoff period for determining the error rate are not reflected in improper payments report estimates.

Our review found that CERT claim payment denials that were overturned after the cutoff date for determining the Medicare FFS error rates would have reduced the error rate that CMS reported from 7.8 percent to 7.2 percent for fiscal year (FY) 2009 and from 10.5 percent to 9.9 percent for FY 2010. Approximately 5.5 percent of the CERT claim payment denials for FY 2009 and 7.6 percent for FY 2010 were overturned during one of the first three levels of the appeals process. If CMS had included these overturned CERT claim payment denials in its error rate calculations, it would have decreased the estimated value of reported errors for FYs 2009 and 2010 by approximately $2 billion each year. CMS could improve the accuracy of the reported estimate of improper payment error rates by including an adjustment for overturned CERT claim payment denials.

We recommended that CMS develop a reliable methodology for adjusting the Medicare FFS error rate, incorporating the outcome of appeal decisions for CERT claim payment denials, to make CMS's estimate of the value of reported errors more accurate. CMS concurred with our findings and outlined steps for implementing our recommendation.