CMS actions help reduce improper payments for inpatient claims: 5 things to know

CMS said Tuesday in a blog post that its corrective actions helped cut the overall Medicare fee-for-service program improper payment rate, from 12.1 percent in 2015 to 11 percent in 2016.

Here are five things to know.

1. Improper payments for inpatient hospital claims dropped from 9.2 percent in 2014 to 3.8 percent in 2016. Inpatient hospital claims accounted for $10.45 billion in improper payments during the 2014 report period (July 1, 2012 to June 30, 2013) but was reduced to $4.42 billion during the 2016 report period (July 1, 2014 to June 30, 2015), marking a decrease of $6.03 billion, according to CMS.

2. CMS said two major policies, intensive provider education and improved oversight contributed to the reduction in improper payments for inpatient hospital claims.

3. To improve oversight, CMS changed its policy to allow hospitals to bill for Medicare Part B services administered during a patient’s hospital stay when admission is found not to be reasonable and necessary. Second, CMS clarified policy for when an inpatient admission is generally appropriate for payment under Medicare Part A by establishing and adjusting the two-midnight rule. The rule sets guidelines suggesting inpatient admissions will generally be payable under Medicare Part A if the admitting practitioner expects the patient to be hospitalized for two midnights and the medical record supports that expectation, CMS said.

4. To improve provider knowledge of regulations, CMS said it established a comprehensive educational campaign to help providers with compliance. Some "probe" audits were conducted of each provider's short stay claims for Medicare Part A payment. After that, Medicare Administrative Contractors sent letters to the providers detailing audit results and offered one-on-one education "to further discuss the errors and encourage a change in future billing behavior," according to CMS. Additionally, the agency said, providers with moderate or major error findings were engaged in up to three additional rounds of review and education.

5. CMS said it is building on these corrective action successes by exploring opportunities to implement prior authorization and pre-claim review programs. "We plan to continue monitoring those services whose payment vulnerabilities drive the improper payment rate, like home health and inpatient rehabilitation claims, to more effectively target our provider education and medical review efforts," the agency added.


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