A review by the Department of Health and Human Services Office of Inspector General (OIG) has found that the Centers for Medicare and Medicaid Services (CMS) and its contractors did not use certain historical payment error-rate data during fiscal years 2005 through 2008 to identify providers for additional review and evaluation. The results of this review are set forth in an October 7, 2010 report. According to the report, focusing on error-prone providers for corrective action and repayment of improper payments could reduce improper payments.

In its review, the OIG examined the error rate data from two programs used to estimate improper Medicare fee-for-service payments during the audit period—the Hospital Payment Monitoring Program (HPMP) (relating to inpatient acute-care hospital claims), and the Comprehensive Error Rate Testing (CERT) program (relating to claims other than inpatient acute-care hospital claims). The OIG found that, although payment contractors developed corrective action plans based on the HPMP and CERT data, those contractors did not use that data to identify and focus on so-called “error-prone providers” (defined by the OIG as providers that had at least one error in each of the four years of the audit period). The report also noted that CMS’s Recovery Audit Contractors (RACs) and Program Safeguard Contractors (PSCs) did not focus on providers based on the HPMP and CERT error rate data because CMS did not share the error rate data with them.

The OIG identified 740 error-prone providers by using the reported error rate data for fiscal years 2005 through 2008. In analyzing the HPMP error rate data, the OIG found that 554 providers (21% of all HPMP providers with at least one claim sampled in each of the four years) accounted for 59% of the dollars in error, while 186 providers (1.81 % of all CERT providers with at least one claim sampled in each of the four years) accounted for 25% of the dollars in error based on analysis of the CERT error rate data.

The OIG recommended that CMS: (1) use available error rate data to identify error-prone providers and share that data with its contractors to assist in identifying improper payments; (2) require error-prone providers to identify the root causes of claims errors and develop and implement corrective action plans; and (3) monitor provider-specific corrective action plans. In its response to the report, CMS concurred with the OIG’s recommendations but noted that it had used error rate data to target providers during the audit period. CMS also stated that, while there currently is no mechanism for requiring providers to develop corrective action plans, it will work with its Office of General Counsel to determine whether CMS has the statutory authority to implement such a process. CMS noted that other administrative actions can be taken, such as probe reviews and individualized education, with respect to providers that prove to be problematic. Additionally, CMS stated that its goal is to reduce improper payments by 50% by 2012.