Medicare contractors rejecting pay for some legitimate services

AMA-ASSN: By CHARLES FIEGL, amednews staff. Posted March 1, 2012.

Washington — A government watchdog’s audit of improper payment determinations for Medicare services showed that contractors had denied payments for some valid services in 2010.

The Centers for Medicare & Medicaid Services uses contractors to manage a comprehensive error-rate testing program that determines the frequency of improper payments in Medicare fee-for-service. In 2010, that error rate was 10.5% and represented an estimated $34.3 billion in improper payments, according to a February report by the Dept. of Health and Human Services Office of Inspector General. However, a review of those audits showed that the error rate would have been lower if contractors had taken extra steps to obtain records showing that billed services were medically necessary.

“Additional efforts to obtain missing documentation could more clearly reflect the true status of improper payments” in the error rate estimate, the OIG said. The error rate in 2010 would have been 10.2%, a total of nearly $1 billion less in improper payments.

The error rate review process begins with a contractor sending letters and faxes requesting documentation for services billed by physicians, health care facilities and suppliers. The contractor will follow up with up to three more requests by phone, letter or fax and ask for additional records when a health professional submits insufficient documentation. Read More