The Health Care Financing Administration has reduced Medicare overpayments by nearly 50 percent over the past five years, according to a new report
from the Department of Health and Human Services' inspector general. In fiscal 2000, improper Medicare payments to hospitals, doctors and other health care providers totaled $11.9 billion, compared with $23.2 billion in fiscal 1996, according to the IG's fiscal 2000 audit of the Health Care Financing Administration (HCFA). HCFA, which oversees Medicare, and HHS both received clean opinions from the IG on their fiscal 2000 financial statements. Improper payments are caused by anything from carelessness to fraud and abuse, but the IG could not determine how many errors were due to fraud. HCFA processed slightly more than $170 billion in payments in fiscal 2000. According to the audit, reforms at HCFA, coupled with greater compliance by health care providers with Medicare reimbursement regulations, contributed to the nearly 50 percent drop in overpayments. Initiatives to counter waste, fraud and abuse that were supported by Congress, the Justice Department and the inspector general also helped reduce the error rate. "The majority of health care providers submit claims to Medicare for services that are medically necessary, billed correctly and documented properly," said Michael F. Mangano, acting IG at HHS, in his report. However, the department must remain vigilant and make sure providers submit proper documentation for reimbursement claims, said Mangano. Although the error rate for fiscal 2000 is not that different from the last few years, the overall reduction since 1996 is significant, the audit said. Last year, Medicare's improper payments totaled $13.5 billion. The inspector general began tracking Medicare's error rate in 1996. The improper payments primarily include billings for services that were medically unnecessary, not properly documented, or not covered by Medicare. Health care providers also sometimes bill Medicare for the wrong procedures by entering incorrect codes on claims forms. In fiscal 2000, 39.5 million people were enrolled in Medicare.