Feds reduce Medicare errors by $8 billion in one year

The federal government reduced Medicare overpayments by nearly $8 billion last year, from an estimated $20.3 billion to $12.6 billion, the Health and Human Services Department announced Tuesday.

According to an audit by HHS Inspector General June Gibbs Brown, the Medicare error rate for 1998 was an estimated 7.1 percent, down from 11 percent in 1997 and 14 percent in 1996. In 1996, Brown estimated that HHS' Health Care Financing Administration (HCFA), which oversees Medicare, made $23.2 billion in improper payments to hospitals, doctors and other health care providers.

"We don't pretend we have solved this problem. $12.6 billion is still too much money," said HHS Inspector General June Gibbs Brown. "But what we're saying is we have turned the corner."

The improper payments range from accidental mistakes to fraud and abuse. The IG's office is unable to determine how many of the improper payments are due to fraud. Two major problems-billing for services that were not medically necessary and "upcoding" claims to get higher reimbursements than were justified-account for about $9.3 billion of the $12.6 billion total improper payments.

HCFA, along with the Justice Department and Brown's office, have launched a major effort called Operation Restore Trust to reduce fraud in recent years, girded by funding Congress set aside for combating improper Medicare payments.

Brown called the reduction in errors a "truly remarkable improvement." Just three years ago, the department had never performed a comprehensive audit of the Medicare program, and had thus never even identified how many Medicare payments were being made improperly.

Sen. Tom Harkin, D-Iowa, commended Brown and HCFA chief Nancy-Ann Min DeParle, but said "there's still too much waste in Medicare."