Department of Health and Human Services
Medicare Fee-for-Service (FFS) is a program that provides hospital insurance (Part A) and supplementary medical insurance (Part B) to eligible citizens. Part A is usually provided automatically to persons 65 and over who have worked long enough to qualify for Social Security benefits and pays for hospital, skilled nursing facility, home health, and hospice care. Part B is voluntary coverage that pays for physician, outpatient hospital, home health, laboratory tests, durable medical equipment, designated therapy, outpatient prescription drugs, and other services not covered by Part A. Medicare processes over one billion FFS claims per year.
Agency Accountable Official: Ellen Murray, Assistant Secretary for Financial Resources
Program Accountable Official: Peter Budetti, Deputy Administrator for Program Integrity, Centers for Medicare & Medicaid Services
Note: Note: Beginning with the Fiscal Year (FY) 2012 report period, HHS modified the report period by moving it back six months. As a result, the FY 2012 reporting period considers claims from July 1, 2010 through June 30, 2011. In addition, HHS refined the improper payment methodology to account for the impact of rebilling of denied Part A inpatient claims for allowable Part B services. These two modifications -- (1) allowing an additional six months for the receipt of late documentation and the effectuation of all appeals, and (2) accounting for the impact of rebilling denied Part A claims under Part B-- comply with the requirements of OMB Circular A-123, Appendix C, and produce a more accurate portrayal of the actual incidence of improper payments in the Medicare FFS program.
The Department of Health and Human Services (HHS) is committed to reducing the percentage of improper payments made from the Medicare FFS program. In order to reduce these improper payments, it is essential to accurately account for where, how, and why these improper payments occur. HHS continuously assesses improper payment rate measurement procedures and makes improvements and modifications as necessary to ensure the most accurate accounting of improper payments. Beginning with the FY 2012 report period, HHS modified the report period by moving it back six months. As a result, the FY 2012 reporting period considers claims from July 1, 2010 through June 30, 2011. The purpose of this modification was to give providers whose claims were selected as part of the error rate sample ample opportunity to undergo the appeals process or to submit additional documentation supporting payment of the claim. It is important to capture the impact of these events in order to report the most accurate improper payment rate possible.
Under current Medicare policy, hospitals that submit a claim for Part A inpatient services that should have been provided on an outpatient basis under Part B are not permitted to re-submit a claim for such payment. These hospitals can only bill for a limited set of ancillary services that were provided to the patient, such as diagnostic laboratory and X-ray tests. Because of this policy, any claim that was inappropriately submitted as inpatient was counted as an error for the total amount billed under Part A. In the past year, the Administrative Law Judges (ALJs) and the Departmental Appeal Board (DAB), which represent the third and fourth levels of Medicare claim appeals (respectively), have concluded that, contrary to HHS’s longstanding policy and interpretation of certain Medicare manuals, policy statements in the manuals support Part B rebilling in these circumstances. As a result, the ALJs and the DAB have directed Medicare to pay hospitals under Part B for all of the services provided (not just the ancillary services) after a Part A inpatient claim is denied. HHS refined the improper payment methodology to account for the impact of rebilling of denied Part A inpatient claims for allowable Part B services. This decision does not reflect a change in HHS policy with respect to rebilling in these circumstances but rather was undertaken to properly reflect the practical impact of the Medicare claim appeals. HHS calculated an adjustment factor of 0.8 percentage points based on a statistical subset of inpatient claims that were in error because the services should have been provided as an outpatient. Consistent with ALJ and DAB rebilling decisions, the adjustment factor reflects the difference between the inpatient Part A payment and the appropriate outpatient Part B payment. Read More...