Medicare made $23B in improper payments in 2017 due to documentation errors, GAO finds

Calculator that says "Medicare" on it on top of money, next to bottle of pills
A new GAO report dives into Medicare and Medicaid paid despite documentation errors. (Getty Images/liveslow)

Medicare made more than $23 billion in improper payments in 2017 due to insufficient documentation, according to a new Government Accountability Office report. 

The GAO also found in its review that Medicaid paid out more than $4 billion for services that were not fully or properly documented. Medicare and Medicaid are supposed to review medical records to ensure that only eligible physicians and hospitals are paid for medically necessary services. 

Payments for services that have been inappropriately documented make up a substantial portion of improper payments caused by error in both programs, according to GAO. 

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What’s causing these errors? For one, Medicare and Medicaid often have very different documentation requirements for the same service, which can lead to mistakes.  

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The Centers for Medicare & Medicaid Services administers Medicare payments directly, while Medicaid is administered by states. Therefore, Medicare reimbursement requires more complex and arduous documentation. 

“The substantial variation in Medicare and Medicaid estimated improper payment rates for the services we examined raise questions about how well the programs’ documentation requirements ensure that services were rendered in accordance with program coverage policies,” GAO wrote in the report. 

The watchdog group offered four recommendations to address the problem in its report: 

  1. CMS should regularly assess whether its documentation processes in Medicare and Medicaid are effective at ensuring providers are complying with coverage requirements.
  2. Medicaid medical review should lead to corrective action to address these issues, as necessary.
  3. CMS should take steps to ensure that payment error rate measurement (PERM) reviews don’t compromise fraud investigations.
  4. CMS should ensure that states are notifying PERM contractors of ongoing fraud investigations. 

In a response to the GAO, the Department of Health and Human Services agreed with all but the second recommendation, saying that a larger sample size for these reviews would increase the administrative burden on states to administer Medicaid. 

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