Medicare FFS Improper Payments Reduced By $20.7B Since 2014, But Skilled Nursing Sees 2020-21 Increase

Aggressive corrective actions taken by the Centers for Medicare & Medicaid Services (CMS) led to a $20.72 billion reduction in Medicare Fee-for-Service (FFS) improper payments over seven years, the entity announced late Monday — for skilled nursing facilities, insufficient documentation was the primary reason for improper payments.

Despite an overall reduction since 2014 lauded by CMS, however, FFS improper payment estimates for skilled nursing facility claims actually increased from 5.43% in 2020 to 7.79% in 2021, according to a financial report released by the Department of Health and Human Services (HHS).

This trend is seen across multiple parts of the care continuum, including hospice, hospitals and home health.

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Improper payments don’t meet CMS guidelines, according to the federal entity, resulting in either overpayment, underpayment or payments associated with insufficient information to support a claim.

Insufficient documentation accounted for 64% of Medicare FFS improper payments overall, across hospital, outpatient, SNFs, home health and hospice claims.

Medical necessity, incorrect coding and no documentation were other reasons given for improper payments.

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“CMS is undertaking a concerted effort to address the root causes of improper payments in our programs,” CMS Administrator Chiquita Brooks-LaSure said in a statement. “The continued reduction in Medicare fee-for-service improper payments represents considerable progress toward the Biden-Harris Administration’s goal of protecting CMS programs’ sustainability for future generations. We intend to build on this success and take the lessons we’ve learned to ensure a high-level of integrity across all of our programs.”

The 2021 Medicare FFS improper payment rate was at a historic low, CMS said, at 6.26%. It’s the fifth consecutive year the rate has been below the 10% threshold for compliance, which was established by the Payment Integrity Information Act of 2019.