The Centers for Medicare & Medicaid Services announced last week that it will recover $371.5 million in Medicare payments made improperly last year to healthcare providers and suppliers in California, Florida and New York.
The improper payments were discovered by the CMS Recovery Audit Contractor demonstration now operating in New York, Massachusetts, Florida, South Carolina and California.
Acting CMS Administrator Kerry Weems said the discovery is an important step toward ensuring accurate payments for services to Medicare beneficiaries, thus keeping their portion of the costs down.
"The RAC demonstration program has proven to be successful in returning overpayments to the Trust Fund and identifying ways to prevent future improper payments," Weems said. "We will use the lessons we learned from the demonstration program to help us implement the national RAC program next year."
According to CMS, the RAC demonstration program, mandated under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, is designed to find and correct improper Medicare payments paid to healthcare providers participating in Medicare fee-for-service programs.
Medicare processes more than 1.2 billion Medicare claims annually, submitted by more than one million healthcare providers, including hospitals, skilled nursing facilities, physicians and medical equipment suppliers. Errors in claims can account for billions of dollars in improper payments each year, CMS said.
Approximately 96 percent of the improper payments identified by the RACs in 2007 were overpayments collected from healthcare providers; the remaining 4 percent were underpayments repaid to healthcare providers.
Nearly $440 million in erroneous claims has been collected since the program began in 2005, the agency reported.
Improper payments found by the RACs included payments made for services that are coded incorrectly and accidental submission of duplicate claims, CMS said. CMS requires healthcare providers to correct any co-payment overcharges to beneficiaries due to the errors.
The RAC demonstration is part of the Comprehensive Error Rate Testing (CERT) program that CMS began in 1996, responsible for dropping payment errors from 14.2 percent in 1996 to 3.9 percent in 2007.