CMS Paid $390 Billion in Claims; $36 Billion Paid in Error—2017 CERT Report

The CERT study gives one the opportunity to identify potential errors the same way that the auditors do.

With nearly a million physicians in this country, how do auditing organizations determine who to audit? As of 2011, a total of 100 percent of Medicare fee-for-service claims started being passed through the Fraud Prevention System: a series of predictive analytics algorithms that help identify claims that may have been billed incorrectly.

But while those results help to target particularly high-risk providers, there is much more to the “audit/don’t audit” decision than just risk. For most auditors, because they are private contractors, their remuneration, bonuses, and/or contract continuation are tied to results – and make no mistake, results are measured in dollars returned to the trust fund. So before an auditor embarks on an audit, it may engage in some form of expected value (EV) calculation that they use to determine the return on investment (ROI).

Calculating EV and ROI requires some advance notion of how much the auditor is likely to find in overpayments versus the cost of doing the audit. And for these types of calculations, many will rely upon the CERT, or the Comprehensive Error Rate Testing study.


CERT

The Centers for Medicare & Medicaid Services (CMS) established the CERT program to calculate a national paid claims error rate for all Medicare fee-for-service programs. The CERT program calculates the error rates for all Medicare Administrative Contractors (MACs), carriers, and fiscal intermediaries (FIs). Reading the CERT documentation, one might find themselves under the impression that records are obtained only from the contractor. This, however, is not the case. In order to assess things like medical necessity, proper documentation, and the like, the agency also requests the medical records from the practices that match the claims samples, adding to the administrative costs of doing business. In general, the sampling methodology includes the following:

  • Randomly selecting around 50,000 claims submitted to the payors during a given reporting period.
  • Requesting medical records from the healthcare providers that submitted the claims in the sample.
  • When medical records were submitted by the provider, reviewing the claims in the sample and the associated medical records to see if the claims complied with Medicare coverage, coding, and billing rules (and if not, assigning errors to the claims).
  • When medical records were not submitted by the provider, classifying the case as a “no documentation” claim and counting it as an error.
  • Sending providers overpayment letters/notices or making adjustments for claims that were overpaid or underpaid.

It’s also important to note that CMS counts underpayments as errors, as well as overpayments. For the 2017 fiscal year, CMS paid out some $390 billion in claims, and of these, around $36 billion (9.5 percent) were paid in error. This simply means that, in the opinion of the auditor, the claim was paid in part or full disagreement with established guidelines, rules, and regulations – or in contrast to the documentation provided. Regarding the 9.5 percent error rate, 0.3 percent represented underpayments. Now, while that may seem trivial, 0.3 percent of $390 billion is over $1 billion, which I would not consider to be crumbs. For example, procedure code 99212 was underpaid 16.9 percent of the time. If you reported 10,000 of these last year, it is statistically likely that some 1,700 were underpaid (or under-documented). So while you are creating your risk assessment, it is probably a good idea to create an opportunity assessment as well.

Within the study, CERT specifies the reason for the improper payment. For example, for 2017, a total of 64.1 percent of claims were paid when it was later determined that there was not sufficient documentation to support the procedure or service. A total of 13.1 percent of payments were made in error due to incorrect coding, while medically unnecessary errors accounted for 17.5 percent of all improperly paid claims. I find the latter statistic interesting, because my experience is that many in our industry consider medical necessity to be the most important coding and billing issue. According to CERT, insufficient documentation accounts for nearly five times the number of error determinations.

From the compliance officer’s perspective, CERT can be a gold mine for building a risk assessment because the study looks at error rates for specific procedure codes, which brings us back to our point on profiling. If CERT identifies specific procedure codes that are associated with high error rates, then it’s only a matter of time before those same codes are used by the auditing agencies as a primer to develop an audit risk profile. Looking at the error rate also provides the auditors with the base data for their EV calculations.

Looking at the 2017 report, for example, we see that CERT reported that of all the 99233 codes reviewed, over 50 percent were paid in error. Of the 99214 codes reviewed, 7.1 percent were paid in error. For calendar year 2016, a total of 23,702,514 claims that included 99233 were submitted to CMS, which paid out $1.8 billion to those providers. If, as stated above, half were paid in error, then nearly $900 million was paid improperly. Imagine for a moment that you are an auditor and you come across a practice that got paid a million dollars on code 99233 last year. Statistically speaking, that means that there is a 50 percent probability that at least half of those were overpaid. This is an easy step from EV to ROI. For 99214, CMS paid out around $7 billion for 103 million encounters, at an error rate of 7.1 percent; this would account for nearly $500 million in potential improper payments. And the list goes on.

The point is this: these auditing agencies, some of which are paid a commission on what they are able to recover from a practice, are going to go for the low-hanging fruit first. So a practice that is reporting a higher number of these 99233 and 99214 codes than their peers may substantially increase their risk of audit and review.

The takeaway here, at least for me, is that the CERT study gives me the opportunity to identify potential errors the same way that the auditors do. And for my money, that’s something you can take to the bank.

And that’s the world according to Frank.

Print Friendly, PDF & Email
Facebook
Twitter
LinkedIn

Frank Cohen

Frank Cohen is Senior Director of Analytics and Business Intelligence for VMG Health, LLC. He is a computational statistician with a focus on building risk-based audit models using predictive analytics and machine learning algorithms. He has participated in numerous studies and authored several books, including his latest, titled; “Don’t Do Something, Just Stand There: A Primer for Evidence-based Practice”

Related Stories

Chevron: Gone, But Not Forgotten

Chevron: Gone, But Not Forgotten

I’ll start with a quote from Yogi Berra, who once said it’s “tough to make predictions, especially about the future.” As I speculated in February,

Read More

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

Preventing Sepsis Denials: From Recognition to Clinical Validation

Preventing Sepsis Denials: From Recognition to Clinical Validation

ICD10monitor has teamed up with renowned CDI expert Dr. Erica Remer to bring you an exclusive webcast on how to recognize sepsis, how to get providers to give documentation that will support sepsis, and how to educate to avert sepsis denials. Register now and become a crucial piece of the solution to standardizing sepsis clinical practice, documentation, and coding at your facility.

August 22, 2024
Comprehensive Inpatient Clinical Documentation Integrity: From Foundations to Advanced Strategies

Comprehensive Inpatient Clinical Documentation Integrity: From Foundations to Advanced Strategies

Optimize your inpatient clinical documentation and gain comprehensive knowledge from foundational practices to advanced technologies, ensuring improved patient care and organizational and financial success. This webcast bundle provides a holistic approach to CDI, empowering you to implement best practices from the ground up and leverage advanced strategies for superior results. Participants will gain actionable insights to improve documentation quality, patient care, compliance, and financial outcomes.

June 26, 2024
Advanced Inpatient Clinical Documentation Integrity: Harnessing Technology, Analytics, and Compliance

Advanced Inpatient Clinical Documentation Integrity: Harnessing Technology, Analytics, and Compliance

Join expert Angela Comfort, MBA, RHIA, CDIP, CCS, CCS-P., as she helps you navigate advanced inpatient CDI technologies, regulatory changes, and system interoperability. Angela will provide actionable strategies for integrating AI and predictive analytics into CDI practices, ensuring seamless system interoperability, and maintaining compliance with evolving regulations. Attendees will learn to select and implement advanced EHR systems and CDI software, leverage data analytics to enhance documentation accuracy, and stay audit-ready with the latest compliance updates. Real-world case studies and practical tools will empower you to drive continuous improvement in CDI, improve patient outcomes, and enhance organizational efficiency. Don’t miss this opportunity to advance your CDI practices and stay ahead in this dynamic field.

July 11, 2024
Foundations of Inpatient Clinical Documentation Integrity: Enhancing Accuracy and Compliance

Foundations of Inpatient Clinical Documentation Integrity: Enhancing Accuracy and Compliance

Join expert Angela Comfort, MBA, RHIA, CDIP, CCS, CCS-P, for an insightful webcast on improving inpatient clinical documentation integrity (CDI). Inaccurate documentation can lead to misdiagnosis, improper treatment, and compromised patient safety. High workloads, lack of standardized practices, and outdated EHR systems contribute to these issues, affecting care quality and financial outcomes. Angela will offer practical strategies and tools to enhance accuracy, consistency, and timeliness in documentation. Attendees will learn to use standardized templates, checklists, and advanced EHR systems, while staying compliant with regulations. Improve patient care, ensure accurate billing, and reduce audit risks with actionable insights from this essential webcast.

June 26, 2024

Trending News

Featured Webcasts

Pediatric SDoH: An Essential Guide to Accurate Coding and Reporting

Pediatric SDoH: An Essential Guide to Accurate Coding and Reporting

This webcast, presented by Tiffany Ferguson, LMSW, CMAC, ACM, addresses the critical gap in Social Determinants of Health (SDoH) reporting for pediatric populations. While SDoH efforts often focus on adults, this session emphasizes the unique needs of children. Attendees will gain insights into the current state of SDoH, new pediatric Z-codes, and the importance of interdisciplinary collaboration. By understanding and applying pediatric-specific SDoH factors, healthcare professionals can improve data capture, compliance, and care outcomes. This webcast is essential for those looking to enhance their approach to pediatric SDoH reporting and coding.

August 8, 2024
Oncology and E/M Services: Compliance, Medical Necessity, and Reimbursement

Oncology and E/M Services: Compliance, Medical Necessity, and Reimbursement

Join Becky Jacobsen, BSN, RN, MBS, CCS-P, CPC, CPEDC, CBCS, CEMC, VP of CDM, for a webcast addressing oncology service coding challenges. Learn to navigate coding for infusions and injections alongside Evaluation and Management (E/M) services, ensuring compliance and accurate reimbursement. Gain insights into documenting E/M services for oncology patients and determining medical necessity. This webcast is essential to optimize coding practices, maintain compliance, and maximize revenue in oncology care.

July 30, 2024
The Inpatient Admission Order: Master the Who, When, and How

The Inpatient Admission Order: Master the Who, When, and How

During this webcast Dr. Ronald Hirsch delves into the inpatient admission order process including when to get it, when it becomes effective, its impact on billing and payment, who can write it, how to cancel it, the effects on the beneficiary, and more. You’ll leave with a clear understanding of inpatient orders and guidelines for handling improper orders that you can implement immediately.

June 20, 2024
Navigating AI in Healthcare Revenue Cycle: Maximizing Efficiency, Minimizing Risks

Navigating AI in Healthcare Revenue Cycle: Maximizing Efficiency, Minimizing Risks

Michelle Wieczorek explores challenges, strategies, and best practices to AI implementation and ongoing monitoring in the middle revenue cycle through real-world use cases. She addresses critical issues such as the validation of AI algorithms, the importance of human validation in machine learning, and the delineation of responsibilities between buyers and vendors.

May 21, 2024

Trending News

Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →