Gov't saves $17.6B in waste and errors, launches new fraud preventions

The White House is making progress on its goals to curb fraud and error in federal programs such as Medicare and Medicaid, preventing $17.6 billion of wasteful payments in 2011, the Office of Management and Budget (OMB) announced yesterday.

Through ramped up fraud prevention, the Medicare fee-for-service error rate dropped from 9.1 percent in 2010 to 8.6 percent in 2011, while the overall error rate for Medicare programs fell from 10.2 percent in 2010 to 8.6 percent this year.

Thanks to the declining error rates, Medicare fee-for-service avoided $7 billion in payment errors and Medicare Part C saved almost $5 billion, the OMB notes.

Medicaid error rates dropped from 9.4 percent in 2010 to 8.1 percent in 2011, saving roughly $4 billion since 2009.

That success has prompted the Centers for Medicare & Medicaid Services (CMS) to launch four pilots to further reduce error rates and cut Medicare and Medicaid waste and fraud, the agency announced yesterday.

Under the pilots, CMS will expand the use of Recovery Audit Contractors, allowing private companies to review certain hospital payments before they are made, in the hopes of preventing wasteful spending before it happens. It also plans to examine changes to outdated hospital billing systems, enabling some claims that are wrongly made as inpatient services to be resubmitted as outpatient, CMS notes.

The agency also is establishing prior authorization for medical equipment claims with high error rates before they are made, as well as helping states weed out fraudsters with an automated tool that screens providers for risk of fraud.

For more information:
- read the OMB press release
- here's the CMS press release