Despite $5.32B Decrease, CMS Likely to Keep Foot on Improper Payments Gas Pedal

The Medicare fee-for-service improper payment rate has fallen once again, thanks largely to the cleaner paperwork and ongoing compliance efforts of U.S. home health providers.

Despite clear and steady progress in bringing improper payment rates down, though, the Centers for Medicare & Medicaid Services (CMS) is unlikely to relax its oversight anytime soon, industry leaders say. Generally, improper payments are any over- or under-payments to Medicare-reimbursed providers that did not meet full statutory or regulatory requirements.

Total Medicare improper payments fell to an estimated $28.9 billion in 2019, CMS announced Monday. While a seemingly huge figure, that total only makes up about 7.25% of all Medicare fee-for-service claims.


Comparatively, 2019 improper payment levels were the lowest since 2010.

Last year, CMS flagged more than $31.6 billion in improper payments to Medicare providers, which often receive them due to unintentional documentation mistakes or misunderstandings — not intentional fraud schemes. 

The Trump administration has made Medicare oversight a priority ever since it took over, a fact recently punctuated when the president instructed CMS to ramp up its fraud, waste and abuse efforts in an October executive order.


When it comes to home health care, in particular, CMS’s improper-payment-reduction initiatives include the five-state Review Choice Demonstration (RCD).

“At a time when Medicare’s ballooning costs are threating the long-term sustainability of the program, President Trump is taking action to protect the program,” CMS Administrator Seema Verma said in a statement. “Every dollar spent inappropriately is one that should have been used to benefit patients.”

RCD and other home health corrective actions — including policy clarifications along with the Targeted Probe and Education (TPE) program — have contributed to “a significant decrease” of $5.32 billion in estimated improper payments from 2016 to 2019, according to CMS.

The estimated home health improper payment rate was 17.61% in 2018, a more than 40% improvement compared to 2015. Although it cited home health care, CMS has yet to release the exact home health improper-payment rate in 2019.

“When we see CMS leading with a reference that the reduction in improper payments was linked to home health services, that’s very encouraging,” National Association for Home Care & Hospice (NAHC) President William A. Dombi told Home Health Care News. “It’s also encouraging to see that they referenced policy clarifications as one of the reasons for that. We’ve long insisted — and I think the CMS data agrees with us — that it wasn’t an issue of abuse.”

“It wasn’t an issue of overzealous claims submissions,” Dombi added. “It was all about paperwork and documentation.”

Pedal to the metal

Home health providers thinking that the improper payment gains will prompt CMS to slow down on RCD shouldn’t get their hopes up.

For the most part, CMS views RCD as a staple in its program integrity plan and as a key tactic for home health providers to perfect their paperwork, according to Dombi. Additionally, he said, RCD has been a good pathway toward improved collaboration between providers and physicians.

“Because of the processing speed that’s necessary, I think RCD has increased the connection between the home health agencies and physicians, increased their ability to get things right — and get them right early,” Dombi said. “The central problem that we found with documentation has been on the physician side of it. Most home health agencies never realize the first gate you go through for coverage determination — and an audit — is whether the physician’s documentation is sufficient to support the claim.”

Another factor that RCD has going for it: The home health improper payment rate is likely still higher than the overall Medicare benchmark, meaning there’s room for improvement. 

“If we assume it’s down to 12% or 14% — something like that — it’s still higher than the average for the Medicare program overall,” Dombi said. “So I don’t think CMS is going to necessarily take its foot off the gas pedal.”

RCD — a more flexible version of pre-claim review — is currently active in Illinois and Ohio.

The demonstration was originally slated for a Dec. 2 expansion into Texas, but CMS issued a three-month delay on Oct. 21 to give providers more time to focus exclusively on the Patient-Driven Groupings Model (PDGM). 

Following the start of RCD in Texas, the demonstration is expected to begin in North Carolina and Florida on May 4.

Although RCD presents positives, it also carries inherent burdens for the impacted home health providers, according to Tom Maxwell, co-founder and co-CEO of consulting firm Maxwell Healthcare Associates.

“Most of our clients are having to add lots of different levels of reviewers in their back-office prior to submitting claims under RCD,” Maxwell told HHCN. “There are multiple steps that have to take place, and we’ve seen providers have to add multiple headcounts.”

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