Knowledge Base Article

Fall is without a doubt my favorite time of year. The one downside is that the days get shorter leaving fewer hours of daylight. Fewer hours of daylight leads to prioritizing what I want to get accomplished on my off days. While deciding where to start is an easy choice when it comes to chores around the outside of my house versus driving through a state park to catch a glimpse of the fall foliage, deciding how to prioritize “at risk” issues for a hospital can be a challenge.  One good starting point is knowing what issues the Comprehensive Error Rate Testing (CERT) Program has found to be “at risk.” 

CERT Program Background

The objective of the CERT program is to calculate the Medicare Fee-for-Service (FFS) program improper payment rate. “The CERT program considers any payment that should not have been made or that was paid at an incorrect amount (including both overpayments and underpayments) to be an improper payment. It is important to note that the improper payment rate does not measure fraud. It estimates the payments that did not meet Medicare coverage, coding, and billing rules.”

The CERT Review contractor performs audits to see how well Medicare Administrative Contractors (MACs) are adjudicating claims. A claim review entails checking for compliance with Medicare statutes and regulations, billing instructions, National Coverage Determinations (NCDs), Local Coverage Determinations (LCDs), and provisions in the CMS instructional manuals. A stratified random sample is chosen by claims types for review and using statistical weighting, the findings from the sample are projected to the total universe of Medicare FFS claims submitted during the report period.

Reconciliation of Improper Payments

The CERT program notifies the MACs of improper payments identified through the CERT process. The MACs then repay underpayments and recoup overpayments. MACs can recover the overpayments identified in the CERT sample but cannot recoup projections made to the claims universe.

Medicare Fee-For-Service 2016 Improper Payments Report

Annually, an Improper Payments Report is released as well an Appendices of tables breaking down the findings. The Medicare FFS 2016 Improper Payments report was posted on the CMS CERT Reports webpage in July of this year. This report includes claims submitted during the 12-month period from July 1, 2014 through June 30, 2015 and highlights the services and supplies that were the largest drivers of the 2016 improper payment rate.  

2016 Report by the Numbers:

• 89% - The estimated Medicare FFS Payment Accuracy Rate.
• $332.6 billion – the estimated amount paid correctly by Medicare for services and supplies provided to Medicare beneficiaries.
• 11% - The estimated Medicare FFS Improper Payment Rate
• $41.1 billion – the estimated amount paid incorrectly by Medicare.
• $22 million or 86% - the amount of actual overpayment dollars identified during the 2016 report period that the MACs had collected as of the time the 2016 report was published.

The report indicates that “the major contributor to the Medicare FFS improper payment rate decrease from 12.1 percent in 2015 to 11.0 percent in 2016, were implementation of CMS’ “Two Midnight” rule and corresponding educational efforts.” Also, as in prior years, “the most common cause of improper payments (accounting for 64.1 percent of total improper payments) was lack of documentation to support the services or supplies billed to Medicare. In other words, the CERT contractor reviewers could not conclude that the billed services were actually provided, were provided at the level billed, and/or were medically necessary.”

2016 Part A Driver of the Improper Payment Rate

The majority of hospital IPPS improper payments were due to the record not supporting a reasonable expectation that the admitting practitioner expected the patient to require a hospital stay that crossed two midnights. During the 2016 report period the CERT denied 733 claims for this reason totaling $7.4 million in actual overpayments. The projected overpayment to the universe of Medicare claims was $2.1 billion.

CMS goes on to note that errors are more likely to occur when the length of stay is shorter and where there is an elective surgical procedure. In fact, 18.6% of improper payments made to Part A IPPS Hospitals was for claims with a length of stay 0 or 1 days.

CMS Key Effort to Prevent and Reduce Improper Payments

One way that CMS and its contractors are working to reduce improper payments is by developing “medical review strategies using the improper payment data to ensure the areas of highest risk and exposure are targeted. MACs use improper payment data analysis to determine which claims to review on either a pre-payment or post-payment basis. Improper payment data analysis also guides the MAC’s corrective actions and educational efforts.

What Hospital Can do to Reduce Improper Payments

Examples of efforts hospitals can undertake to prevent and reduce improper payments include:

• Visit the CERT Provider Website that provides information about the CERT, how to submit records, sample request letters and much more.
• Become familiar with NCDs, LCDs and coverage articles that provide guidance on what is needed to support the medical necessity of the services you provide. The CERT Provider Website contains a link to a CMS CERT Presentation. Below is an example from the presentation reinforcing the need to be familiar with coverage determinations:

Medical Necessity Example

• “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.”

• Visit the CERT A/B MAC Outreach & Education Task Force page on the CMS website which includes Education Resources, Web-based Training, Presentations and information about any upcoming events.
• Become familiar with and utilize your hospitals Program for Evaluating Payment Patterns Electronic Report (PEPPER).
• And last but not least be familiar with the improper payment issues identified in the Annual CERT Reports.