The Centers for Medicare & Medicaid Services (CMS) found that the Federally-facilitated Exchange (FFE) program properly paid an estimated 99.38 percent of total outlays, or $41 billion in benefit year 2020. The small percentage of improper payments was due to manual errors.
The agency credits the fact that most payments met its program requirements due to the implementation of effective automated processes for the FFE’s eligibility determinations and payments.
Improper payments can be overpayments, underpayments, or payments in which insufficient information was provided to determine whether a payment was appropriate. Most improper payments are due to a state or provider missing an administrative step and are not due to fraud, according to CMS.
In an announcement, CMS said this year is the first time it has included measurements of the improper payment rate for the Advance payment of the Premium Tax Credit program for the FFE in CMS’ and the Department of Health and Human Services’ annual 2022 Agency Financial Report. CMS found that the improper payment rate for the program in Benefit Year 2020 was 0.62 percent or $256 million. The agency estimated the improper payment rate based on a review of stratified random sample of applications to determine if the FFE properly performed the required eligibility determinations and paid the appropriate benefits for each sampled application.
The primary causes of improper payments were manual errors associated with determining consumer eligibility for payments when verification by automated processes were insufficient or not possible, according to CMS. For example, an improper payment could occur if a consumer is determined eligible for payments based on submitted documentation that did not meet requirements.
“This low rate of improper payments in the Federally-facilitated Exchange is a testament to the effectiveness of our efforts to ensure program integrity, furthering the Biden-Harris Administration’s goal of maintaining the long-term sustainability of CMS’ programs,” said CMS Administrator Chiquita Brooks-LaSure. “We are committed to strengthening and maintaining these efforts to bring down improper payment rates across the board.”
The FFE improper payment estimate does not reflect payments made by state-based exchanges.
CMS also reported:
Significant decline in Medicaid and CHIP improper payment rate: The 2022 Medicaid improper rate was 15.62 percent, or $80.57 billion, a decrease from the 2021 reported rate of 21.69 percent. Of the 2022 Medicaid improper payments, nearly 87 percent were due to insufficient documentation. For CHIP, the 2022 improper payment rate was 26.75 percent, or $4.30 billion, a decrease from the 2021 rate of 31.84 percent. Of the 2022 CHIP improper payments, 76.05 percent were the result of insufficient documentation, not a finding of fraud or abuse.
Medicare Fee-For-Service (FFS) improper payment rates below the 10 percent statutory threshold for sixth consecutive year: CMS said that for 2022, the FFS estimated payment rate was 7.46 percent. In addition, the agency said it has made progress in efforts to combat improper payments in durable medical equipment claims. Indeed, these types of claims saw a $193 million reduction in estimated improper payments since 2021.
Medicare Part C and Part D improper payment rates are below the 10 percent statutory threshold: The 2022 Medicare Part C estimate improper payment rate is 5.42 percent. CMS said that it has refined its policy and methodology to improve the accuracy of the payment error estimate. As a result, CMS noted a new baseline result and the 2022 rate is not directly comparable with prior reporting years. The 2022 Medicare Part D estimated improper payment rate is 1.54 percent, a slight increase from 2021 that is likely the result of year-over-year variability.
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