Medicare Improper Payment Rate Declines in 2018

November 21, 2018

Medicare reached a milestone in 2018: The rate of improper Medicare payments decreased for the first time in program history.

According to the Centers for Medicare and Medicaid Services (CMS), the program’s improper payment rate for fee-for-service reimbursement fell from 9.51 percent in 2017 to 8.12 percent in 2018. It marks the first time in the program’s reporting history that the improper payment rate dropped for Medicare, Medicaid and the Children’s Health Insurance Program (CHIP).

Medicare saves $4.59 billion from 2017 to 2018 by reducing improper payments

The Medicare improper payment rate is the lowest since 2010. 2018 is the second straight year that the program is under the 10 percent limit for compliance outlined by the Improper Payments Elimination and Recovery Act of 2010.

The reduction in improper payments saved the Medicare program $4.59 billion from fiscal year 2017 to fiscal year 2018.

Some improper payments are cases of fraud, while others are accidental overpayments, payments given to the wrong provider, coding errors or payments that did not meet other program requirements.

Efforts to reduce improper Medicare payments continue

Medicare has been making a dedicated effort to curb improper payments in recent years. Some of the latest efforts include simplifying payment policies and implementing measures that ensure payment and coding rules are met before services are rendered.

CMS also recently implemented a targeted review strategy focused on provider education, assistance and burden reduction.

The bulk of the reduction was centered around home health care, where the improper payment rate was as high as nearly 59 percent in 2015. That number has been trimmed to 17.6 percent in 2018, and a new payment model will be introduced in 2020 that aims to further lower the rate.

The improper payment rates for skilled nursing facility care fell from 9.3 percent in 2017 to 6.5 percent in 2018, accounting for roughly $1 billion in savings. Improper payments for durable medical equipment also experienced a significant decrease in 2018, but the industry still suffers from an improper payment rate of more than 35 in 2018.

Read additional medicare costs guides to learn more about Medicare costs and how they will affect you.