Estimating payment error for Medicare acute care inpatient services

Area of Science:

• Health Services Research
• Public Health Policy
• Healthcare Economics

Background:

• The Centers for Medicare & Medicaid Services (CMS) now oversees Medicare fee-for-service (FFS) error rate estimation.
• This function was previously managed by the Office of the Inspector General (OIG).

Purpose of the Study:

• To present the methodology for calculating Medicare FFS error rates.
• To provide national and state-level estimates for inpatient acute care errors.
• To identify variations in error rates by state and error type.

Main Methods:

• Analysis of Medicare fee-for-service (FFS) data for inpatient acute care discharges.
• Calculation of national and state-specific net error rates.
• Categorization of errors by type.

Main Results:

• National net error rates for inpatient acute care were 2.6% in FY 1998 and 2.8% in FY 2000.
• These rates represent approximately $2 billion in annual improper reimbursements.
• Significant variation in error rates was observed across different states.

Conclusions:

• State-level error rate estimates are crucial for targeted interventions.
• Monitoring and reducing improper Medicare inpatient reimbursements requires state-specific data.
• The methodology presented allows for detailed analysis of Medicare FFS errors.