Medicare Part C Improper Payment Measurement

Medicare Part C Improper Payment Measurement Blog

The Improper Payment Measurement or IPM provides statistical data on parts of the Medicare programs and reports overpayments and underpayments. The Medicare Part C beneficiary-level of payment errors from a given year is included and certainly is something to keep an eye on. The CMS IPM sample taken is extrapolated to determine the payment error to the risk adjustment population for the gross payment error amount. You may be familiar with the Risk Adjustment Data Validation (RADV) which was a CMS activity used to estimate improper payments, which is now the IMP. The CMS IPM FY 2021 Part C improper payment estimate is reported to be 10.28%. “CMS is undertaking a concerted effort to address the root causes of improper payments in our programs,” said CMS Administrator Chiquita Brooks-LaSure.

Medicare Part C or Medicare Advantage (MA) is a risk adjustment (RA) based payment methodology using Hierarchical Condition Categories (HCCs) of more than 9,000 ICD-10-CM codes. In addition, this payment model provides additive relative factors that are also used to determine risk scores and calculate risk-adjusted payments to MA organizations for their beneficiaries.

Inaccurate or incomplete diagnosis data may lead CMS to disburse over-payments or even under-payments to the contracted MA organizations. CMS has been tracking the MA overpayments and underpayments since 2011. The 2020 IPM report was based upon calendar year 2018 and showed $8,799,942,438 in overpayments and $7,471,716,989 in underpayments, for a net overpayment of $1,328,225,449. This represents an overall 3.7% error rate, which is down from 2019, which was 4.6%. The error rate has continued to trend down over the past several years, which is a good thing. But when we are talking about BILLIONS of dollars this is still significant!

Per CMS: Overpayments occur when CMS-HCCs originally reported to the CMS Encounter Data System (EDS) or the Risk Adjustment Processing System (RAPS) for payment are not supported by the medical record or are identified during medical record review as lower manifestations in the disease hierarchies.

The COVID-19 Pandemic had an impact on the collection of medical records for the reviews, thus a suspension occurred in April 2020, which was 7 weeks into the 18-week collection cycle. This resulted in an impact to the HCCs that could be validated and will impact overall data for the payment error period.

These above findings tell us that the medical record documentation and clinical coding is critical to accuracy of HCCs and compliance. Ongoing internal and external audits are needed in both outpatient settings and hospital inpatient to ensure and maintain ethical practices. Keep in mind that “improper payments” are those that do not meet the Centers for Medicare and Medicaid requirements.

In addition to MA improper payments, CMS also tracking and validates improper payments for “Fee-For-Services” (FFS). Per a November CMS news release, the aggressive corrective action have led to an estimated $20.72 billion reduction in PPS improper payment over seven years. The majority of FFS improper payments come from two categories:

  • Insufficient documentation; and
  • The documentation provide for the items or services billed did not sufficiently demonstrate medical necessity.

The 2019 The Payment Integrity Information Act defines significant improper payments as either:

(i) improper payments greater than $10 million and over 1.5 percent of all payments made under that program, or

(ii) improper payments greater than $100 million.

The Office of Management and Budget (OMB) has identified Medicare Fee-For-Service (FFS), Medicare Part C, Medicare Part D, Medicaid, and the Children’s Health Insurance Program as susceptible to significant improper payments. Comments made by Jonathan Blum CMS principal deputy administrator and COO include the following, “CMS is committed to reducing and preventing improper payments. It is important to understand that only a small fraction of improper payments represent a payment that should not have been made – and an even smaller percentage represent actual cases of fraud.”

Visit the CMS website for Improper payments for Medicare Part C at: Medicare Part C Improper Payment Measurement (IPM) | CMS

In addition, there is some useful information at the following CMS MA site as well:

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This program has been approved for continuing education unit(s) (CEUs) for use in fulfilling the continuing education requirements of the American Health Information Management Association (AHIMA). Granting of Approved CEUs from AHIMA does not constitute endorsement of the program content or its program provider.