News and Commentary

Trump Administration Eliminating Waste In Improper Medicare Payments
U.S. President Donald Trump announces a plan to overhaul how Medicare pays for certain drugs during a speech at the Department of Health and Human Services October 25, 2018 in Washington, DC.
Photo by Chip Somodevilla/Getty Images

On Thursday, the Trump Administration’s Health and Human Services Department (HHS) announced that the 2019 Medicare Fee-For-Service Improper Payment Rate is now the lowest since 2010, thus strengthening the Medicare system by cutting out waste.

HHS reported, “Estimated improper payments for Medicare Fee-For-Service (FFS) declines more than $7 billion from FY 2017-2019.” HHS explained, “Improper payments represent payments that don’t meet program requirements – intentional or otherwise –and contribute to inaccurate spending of Americans’ tax dollars.”

As the Centers for Medicare and Medicaid Services explained:

The Improper Payments Information Act of 2002 (IPIA), as amended by the Improper Payments Elimination and Recovery Act of 2010 and the Improper Payments Elimination and Recovery Improvement Act of 2012, requires CMS to periodically review programs it administers, identify programs that may be susceptible to significant improper payments, estimate the amount of improper payments, and report on the improper payment estimates and the Agency’s actions to reduce improper payments in the Department of Health & Human Services (HHS) annual Agency Financial Report (AFR). The Office of Management and Budget (OMB) has identified Medicare Fee-For-Service (FFS), Medicare Part C, and Medicare Part D; Medicaid; and the Children’s Health Insurance Program (CHIP) as at-risk for significant improper payments.

Administrator Seema Verma asserted, “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. 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.”

Verma added, ““Our progress on improper payments is historic, but there’s more work to be done. CMS has taken a multifaceted approach that includes provider enrollment and screening standards to keep bad actors out of the program, enforcement against bad actors, provider education on our rules and requirements, and advanced data analytics to stop improper payments before they happen. These initiatives strike an important balance between preventing improper payments and reducing the administrative burden on legitimate providers and suppliers.”

HHS continued, “The Medicare FFS estimated improper payment rate decreased to 7.25 percent in FY 2019, from 8.12 percent in FY 2018, the third consecutive year the Medicare FFS improper payment rate has been below the 10 percent threshold for compliance established in the Improper Payments Elimination and Recovery Act of 2010.”

Different aspects of the American health system showed the decline in improper payments; home health claims corrective actions triggered a $5.32 billion decrease in estimated improper payments from FY 2016 to FY 2019; other Medicare Part B services (e.g., physician office visits, ambulance services, lab tests, etc.) saw a $1.82 billion reduction in estimated improper payments in the last fiscal year; durable medical equipment, prosthetics, orthotics, and supplies improper payments decreased an estimated $1.29 billion from FY 2016 to FY 2019.

HHS concluded, “CMS is taking steps to ensure that states are working with their eligibility systems vendors to guarantee that every person on the program meets eligibility requirements and states maintain appropriate documentation of their verification process.”

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