Knowledge Base Article

In mid-November, the Comprehensive Error Rate Testing (CERT) published the 2024 Medicare Fee-for-Service Supplemental Improper Payment Data (https://www.cms.gov/files/document/2024-medicare-fee-service-supplemental-improper-payment-data.pdf). This report supplements the FY 2024 HHS Agency Final Report for Fiscal Year 2024, highlights common causes of improper payments, and includes tables allowing you to drill down into the review findings.

Estimated Improper Payment Rates

Calculation for the FY 2024 Medicare FFS improper payment rate included claims submitted during the 12-month period from July 1, 2022 through June 30, 2023. As compared to FY 2020 and 2021, the improper payment rate is trending up.

Table 1

“It is important to note that the improper payment rate is not a “fraud rate,” but is a measurement of payments that did not meet Medicare requirements. Improper payments are attributed to one of five major error categories (no documentation, insufficient documentation, medical necessity, incorrect coding, or other).

Unfortunately, like last year, “insufficient documentation” continues to be the main cause of improper payments. The CERT defines “insufficient documentation” as when the medical record documentation submitted is inadequate to support payment for the services billed. In other words, the CERT contractor reviewers could not conclude that the billed services were provided, were provided at the level billed, and/or were medically necessary. Claims are also placed into this category when a specific documentation element that is required as a condition of payment is missing, such as a physician signature on an order, or a form that is required to be completed in its entirety.

While the CERT data reports on improper payments in various settings (i.e., skilled nursing facilities, hospital outpatient, hospice), this article focuses on Part A (Hospital IPPS) findings.

“0 or 1 day” Length of Stay Claims

A compare of improper payments rates for Part A hospital claims by length of stay (LOS) has been a part of this annual report since the October 1, 2013 implementation of the Two-Midnight Rule. Table 1 trends short stays findings from the initial year this information was included in the CERT report.

Table 2

In addition, to the CERT’s focus on claims by length of stay, short stays (“0 of 1 Day” Stays) short stays are also actively being reviewed by the OIG as part of their Work Plan (https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000538.asp) and Livanta, the National Medicare Claim Review Contractor (https://livantaqio.com/en/ClaimReview/index.html), who reviews short stay claims across the nation on a monthly bases.  

Top 20 Service Types with Highest Improper Payments: Part A Hospital IPPS

Table D4 of the CERT report includes the top 20 DRG types with the highest improper payment rate. The table also details the percentage of error by each of the CERT’s major error categories.

For fourteen of the top 20 DRG types, the type of error with the highest percentage was error type medical necessity. A claim is placed in this category when the CERT contractor reviewer receives adequate documentation from the medical records submitted to make an informed decision that the services billed were not medically necessary based upon Medicare coverage and payment policies. The following three DRG types had the highest percent of errors attributed to medical necessity:

• DRG Pair 551 and 552 (Medical Back Problems): 99.6% error attributed to medical necessity.
• DRG 884 (Organic Disturbances & Intellectual Disability): 93.1% error attributed to medical necessity.
• DRG Pair 469 and 470 (Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity): 92.8% error attributed to medical necessity.

   

  Top Root Causes of Improper Payments

  The 2024 CERT report includes the same top three service types with the highest improper payments in the Part A (Hospital IPPS) setting as in the 2023 report. Each of the three service types also have the same top root cause for improper payments in FY 2023 and FY 2024.

   

  In the 2024 report, the CERT identified the following new root causes of improper payments not noted listed in the 2023 report.

   

  New Root Causes for DRG 469 and 470

• Documentation to support conservative treatment for the billed surgical procedure(s) – missing,
• Preoperative surgeon’s office notes – missing,
• Documentation to support conservative treatment for the billed surgical procedure(s) – inadequate, and
• Radiographs to support medical necessity for the billed surgical procedure(s) – inadequate.

   

  New Root Cause for DRGs 273 and 274

• Documentation to support medical necessity for the procedure – Missing.

   

  New Root Causes for DRGs 266 and 267

• NCD requirements, other documentation required for payment – Missing, and
• Incorrect secondary diagnosis code – DRG change.

   

  Moving Forward

  Moving forward, here are ideas and resources to help in your efforts to prevent claims errors:

• Visit the CERT Provider Website (https://c3hub.certrc.cms.gov/) to find information about the CERT, how to submit records, view sample request letters and much more,
• Become familiar with National and Local Coverage Determinations and Local Coverage Articles that detail indications and limitations of coverage for applicable services. For example, CMS has published two resources related to Major Hip and Knee replacement:
  • MLN Product: Medicare Compliance Tips: Major Hip & Knee Replacement or Reattachment of Lower Extremity (https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/medicare-provider-compliance-tips/medicare-provider-compliance-tips.html#Hip), and
  • MLN Matters article SE19002: Total Knee Arthroplasty (TKA) Removal from the Medicare Inpatient-Only (IPO) List and Application of the 2-Midnight Rule (https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/SE19002.pdf), and
• Annually, take the time to review the new Supplemental Improper Payment Data report. Historically, a new FY report is released in late November.

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