CERT Supplemental Improper Payment Data Report

on Monday, 29 January 2018. All News Items | Case Management | Medicare Coverage | Billing

2017 CERT Report Released January 8, 2018

According to the Payment Accuracy.gov website “The Improper Payments and Elimination and Recovery Act of 2010 defines an “improper payment” as any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements.

Expressed positively, a proper payment has four main attributes: right recipient, right amount, right reason, and right time.  A violation of any one of any attributes may result as an “improper payment” if an agency cannot document those conditions.  Furthermore, not all “improper payments” are the result of fraudulent actions or represent monetary loss to the government.”

The Comprehensive Error Rate Testing (CERT) Program calculates improper payment rates for the Medicare Fee-for-Service program. This article focuses on the CERT Program and Review Process and findings from the 2017 CERT Report.

CERT Program & Review Process

The CERT Program was implemented by CMS to measure improper payments in the Medicare Fee-for-Service (FFS) Program. For each reporting period, the CERT Program selects a stratified random sample of approximately 50,000 claims submitted to Part A/B Medicare Administrative Contractors (MACs) and Durable Medical Equipment MACs (DMACs).

Medical review professionals perform complex medical reviews to determine whether a claim was paid properly under Medicare coverage, coding and billing rules. This process includes the following steps:

  • Claim selection,
  • Medical Record Requests,
  • Review of claims by medical review professionals to determine whether a claim was paid properly under Medicare coverage, coding and billing rules,
  • Assignment of Improper Payment Categories (no documentation, insufficient documentation, medical necessity, incorrect coding and other), and
  • Calculation of the Improper Payment Rate.

CMS calculates a national improper payment rate and contractor specific and service specific improper rates from this stratified random sample of claims. As noted on the CMS CERT webpage, “The improper payment rate calculated from this sample is considered to reflect all claims processed by the Medicare FFS program during the report period.”

CMS notes “that the improper payment rate is not a “fraud rate,” but is a measurement of payments that did not meet Medicare requirements. The CERT program cannot label a claim fraudulent.”

In a CMS Introduction to CERT download on the CMS CERT webpage, the following examples are provided specific to each improper payment category.

Improper Payment by Category
Error CategoryCategory DescriptionCMS Example
No Documentation Provider/Supplier responds that they do not have the requested documentation; OR
Provider/Supplier fails to respond to repeated requests for medical records
Insufficient Documentation Documentation submitted is inadequate to support payment for services billed; OR
CERT contractor reviewers unable to conclude that billed services were actually provided at level billed, and/or were medically necessary; OR
Specific documentation element required as a condition of payment is missing
“A hospital billed for infusion of a medication provided in the outpatient department. The CERT program received a visit note to support the medical necessity of the medication. However, the physician’s order and the administration record for the infusion were missing.”
Medical Necessity CERT contractor reviewer receives adequate documentation from medical records submitted to make an informed decision that services billed were not medically necessary based on Medicare coverage & payment policies “The CERT program received medical records from two different physicians documenting that a patient who underwent implantation of an AICD had severe dementia. The National Coverage Determination (NCD 20.4) specifies that the patient must not have irreversible brain damage from preexisting cerebral disease. The CERT contractor reviewers made an informed decision that the services billed were not medically necessary based upon Medicare coverage and payment policies.”
Incorrect Coding Provider/supplier submits medical documentation supporting:
  1. A different code than that billed,
  2. That the service was performed by someone other than the billing provider/supplier,
  3. That the billed service was unbundled,
  4. That a beneficiary was discharged to a site other than the one coded on a claim.
“A nephrologist billed for four visits for ESRD related services in the month of June 0213. The CERT program received only one visit note. The physician’s notes for the remaining three visits were missing. Medical reviewers and coders determined that the documentation supported a code change from 90960 to 90962 (ESRD related services monthly, for patients 20 years of age and older; with 1 face-to-face visit by a physician or other qualified health care professional per month).”
Other Improper payments that do not fit into any of the other categories. Examples:
  • Duplicate payment error
  • Non-covered or unallowable service
“A DMEPOS supplier billed for an upper limb orthosis. The PDAC determined that is was classified as exercise equipment. Exercise equipment is non-covered by Medicare.”


2017 CERT Report by the Numbers:

Annually, the Department of Health and Human Services (HHS) publishes the improper payment rate in the Agency Financial Report. CMS later publishes more detailed improper payment rate information in the form of the annual Medicare FFS Improper Payments Report and Appendices.  CMS published the 2017 Medicare Fee-for-Service Supplemental Improper Payment Data Report on January 8, 2018. This report includes a review of claims submitted from July 1, 2015 through June 30, 2016.  

Overall Claims Volume

  • 21,120 - The number of claims sampled.
  • 14,500 - The number of claims reviewed.

Accuracy & Improper Payment Rates

  • 5% - The Percent Accuracy Rate representing $344.68 billion in claims.
  • 5% - The Improper Payment Rate representing $36.2 billion in claims.

Common Causes of Improper Payments

  • 1% - Insufficient Documentation
  • 5% - Medical Necessity
  • 1% - Incorrect Coding
  • 7% - No Documentation
  • 6% - Other

“0 or 1 Day” LOS Claims Continued Outlier

The CERT Program has reported Projected Improper Payments by Length of Stay (LOS) since the 2014 Report. While the Improper Payment Rate has dropped for “0 or 1 day” LOS claims, this group of claims continues to have the highest improper payment rate.

Part A Inpatient PPS Length of Stay2014 Report2015 Report2016 Report2017 Report
Number of Claims SampledImproper Payment RateNumber of Claims SampledImproper Payment RateNumber of Claims SampledImproper Payment RateNumber of Claims SampledImproper Payment Rate
Overall Part A(Hospital IPPS) 14,359 12.2% 12,864 7.4% 14,490 4.5% 14,500 4.4%
0 or 1 day 2,456 37.1% 1,944 27.8%↓ 1,689 18.6%↓ 1,685 18.2%↓
2 days 2,488 20.2% 2,074 11.2% 2,315 7.1% 2,465 5.1%
3 days 2,610 12.9% 2,173 8.7% 2,485 4.5% 2,742 4.8%
4 days 1,761 10.9% 1,507 6.0% 1,739 3.4% 1,723 3.3%
5 days 1,183 7.5% 1,084 6.5% 1,286 2.9% 1,245 3.2%
More than 5 days 3,852 7.1% 4,082 3.9% 4,976 2.7% 4,950 2.6%
Data Source: CERT Report Table B7

“0 or 1 Day” Audit Focus

The FY 2016 Office of Inspector (OIG) Work Plan included the issue of Hospital’s use of outpatient and inpatient stays under Medicare’s two-midnight rule (OEI; 02-15-00020).  In December 2016, the OIG released the report, Vulnerabilities Remain Under Medicare's 2-Midnight Hospital Policy. This study was based on hospital claims and did not include a medical review. More specifically, the OIG considered inpatient claims lasting 2 midnights or longer as being “appropriate” and claims lasting less than 2 midnights to be “potentially inappropriate.”

One recommendation made to CMS by the OIG was to “conduct routine analysis of hospital billing and target for review the hospitals with high or increasing numbers of short inpatient stays that are potentially inappropriate under the 2-midnight policy.” CMS agreed and noted that its Quality Improvement Organizations are currently conducting short stay patient status reviews for the appropriateness of Part A payment.

Short Stays for Chest Pain: New LCD for Jurisdiction J

The OIG report identified chest pain as one of the most common reasons for a short inpatient stay to be “potentially inappropriate.”

Hopefully, you are aware that the MAC for Jurisdiction J Part A transitioned from Cahaba GBA to Palmetto GBA this past Monday January 29th. What you may not know is that Palmetto GBA has a One Day Stays for Chest Pain Local Coverage Determination (LCD L34551) that became active the same day. This guidance will be used by the BFCC-QIO (KEPRO) for Alabama, Georgia and Tennessee when reviewing short stay claims for chest pain.

Compliance with Short Stays

Have you tracked your short stay volume overall, by MS-DRG or Physician over time? Do you know if your hospital is an outlier? Where can you look to find these answers?


One resource available to hospitals is the Short-Term Acute Care PEPPER (Program for Evaluating Payment Patterns Electronic Report). The PEPPER is made available to hospitals on a quarterly basis and compares your hospital to your state, MAC Jurisdiction and the nation. One-day Stays for Medical and Surgical MS-DRGs are two of the “Target Areas” at risk for improper payments included in this report.

The PEPPER provides the following suggested interventions for high One-day Stays Hospitals:  

“This could indicate that there are unnecessary admissions related to inappropriate use of admission screening criteria or outpatient observation. A sample of same- and/or one-day stay cases should be reviewed to determine if inpatient admission was necessary or if care could have been provided more efficiently on an outpatient basis (e.g., outpatient observation). Hospitals may generate data profiles to identify same- and/or one-day stays sorted by DRG, physician or admission source to assist in identification of any patterns related to same- and/or one-day stays. Hospitals may also wish to identify whether patients admitted for same- and/or one- day stays were treated in outpatient, outpatient observation or the emergency department for one or more nights prior to the inpatient admission. Hospitals should not review same- and/or one- day stays that are associated with procedures designated by CMS as “inpatient only.”

RealTime Medicare Data

Another source that can help assist you is our sister company, RealTime Medicare Data (RTMD). RTMD collects over 800 million Medicare claims annually from 23 states and the District of Columbia, and allows for searching of over 7 billion historical claims. In response to the “Two-Midnight” Policy, RTMD has available in their suite of Inpatient Hospital reports a One Day Stay Report. To give you a true picture of your “at risk” volume, this report excludes claims with a discharge status for Expired (20), left against medical advice (07), hospice (50 & 51) and /or were transferred to another Acute care facility (02). This report enables a hospital to view one day stay paid claims data by DRG and Physician to direct where audits should be focused. For further information on all that RTMD has to offer you can visit their website at www.rtmd.org.

To learn more about the CERT visit AdvanceMed’s CERT Provider Documentation Information website at https://certprovider.admedcorp.com/Home/About.

Article by Beth Cobb

Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Services at Medical Management Plus, Inc.  Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system.  In her current position, Beth monitors, interprets and communicates current and upcoming Case Management / Clinical Documentation issues as they relate to specific entities concerning Medicare.  You may contact Beth at This email address is being protected from spambots. You need JavaScript enabled to view it..

This material was compiled to share information.  MMP, Inc. is not offering legal advice.  Every reasonable effort has been taken to ensure the information is accurate and useful.

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