Medicare FFS’ 3 Year Improper Payment Total: $125 Billion

From 2013 to 2015, Medicare paid out a total of $125 billion under the Medicare Fee-For-Service program according to a recent article in Bloomberg. The improper payment rates exceeded 10% for all three years examined. As a result, the U.S. Government required a report from the Department of Health and Human Services’ Office of Inspector General regarding plans to address the problem.

The report pointed to the insufficient documentation of claims for the services of home health aides as a primary example of the improper payments. Anyone who has been following the False Claims Act world for the past few years knows that this has been a significant area of fraud. There have been numerous lawsuits brought by whistleblowers regarding kickbacks in the industry as well as improper certifications of patients as home bound.

A recent GAO study examined a related problem in the Medicare system – the failure to recover for improper payments to Medicare Advantage organizations. The GAO conducted the study because the Centers for Medicare & Medicaid Services believe that 9.5 percent of its payments to these organizations were improper. In 2014, it paid $160 billion to operators of Medicare Advantage plans.

Medicare Advantage has been called the “next frontier” for False Claims Act lawsuits with the potential to become a “multibillion-dollar front in the government’s anti-fraud fight ….” According to media reports last year, there have been at least a half dozen whistleblower lawsuits in this area unsealed.

The GAO report suggested potential improvements to better recover money spent through risk adjustment data validation (RADV) audits of the organizations administering Medicare Advantage plans. These suggestions included improving the process for the selection of contracts to be audited, enhanced timeliness of audits (the 2007 and 2011 audits have taken a long time!) and incorporate Recovery Audit Contractors in the process.

Medicare Advantage plans are privately run and have become very popular alternatives to the traditional Medicare system. Roughly 31 percent of the Medicare population had enrolled in one of the approved plans in 2015 with annual growth of 7 percent over the previous year. There are 18 plans which service the 16.8 million beneficiaries which have decided to enroll.

For additional information about reporting health care fraud, contact our False Claims Act attorneys.