The Centers for Medicare & Medicaid Services (CMS) said its aggressive corrective actions led to an estimated $20.72 billion reduction of Medicare Fee-for-Service (FFS) improper payments over seven years.

CMS announced on  Monday that the 2021 Medicare FFS estimated improper payment rate (claims processed July 1, 2020 to June 30, 2021) is at a historic low of 6.26 percent. It’s the fifth consecutive year the Medicare FFS improper payment rate has been below the 10 percent threshold for compliance established in the Payment Integrity Information Act of 2019.

Improper payments are payments that do not meet CMS program requirements, such as overpayments, underpayments, or payments where insufficient information was provided to determine whether a payment is proper or not. CMS said that most improper payments involve situations where a state or provider missed an administrative step.

“CMS is committed to reducing and preventing improper payments,” Jonathan Blum, CMS principal deputy administrator & chief operating officer, said in the announcement. “It is important to understand that only a small fraction of improper payments represent a payment that should not have been made– and an even smaller percentage represent actual cases of fraud.”

CMS credits its corrective actions in the following areas for the historically low improper payment rate:

  • Inpatient Rehabilitation Facility claims had a $1.81 billion decrease in estimated improper payments from 2018 to 2021. This is the result of CMS clarifying its policy to reduce provider burden and educating providers through the Targeted Probe and Educate program, which offers one-on-one help to providers, focusing on those who have high denial rates or unusual billing practices, to reduce claim errors and denials.
  • Durable Medical Equipment claims saw a $388 million reduction in estimated improper payments since 2020 due to a nationwide expansion of prior authorization of certain DME items as well as the Targeted Probe and Educate program.

CMS also announced that the FY 2021 Part C improper payment estimate is 10.28 percent. However, it said that the 2021 Part C error rate estimate is not comparable to prior years because the agency has refined the error rate calculation methodology.

The FY 2021 projected Part D improper payment rate is 1.58 percent, which is a slight increase due to year-over-year variability.

For more information, click here for the CMS announcement and here for a fact sheet.