Knowledge Base Article

Fiscal Year 2022 Supplemental Improper Payment Data

On December 8, 2022, the Comprehensive Error Rate Testing (CERT) published the 2022 Medicare Fee-for-Service Supplemental Improper Payment Data (https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/CERT-Reports).

This report supplements the FY 2022 HHS Agency Final Report for Fiscal Year 2022, highlights common causes of improper payments, and includes tables allowing you to drill down into the review findings.

Estimated Improper Payment Rates

Calculation for the FY 2022 Medicare FFS improper payment rate included claims submitted during the 12-month period from July 1, 2020 through June 30, 2021. As compared to FY 2020 and 2021, the improper payment rate is trending up:

Improper Payment Rate

• FY 2020: 6.27%
• FY 2021: 6.26%
• FY 2022: 7.46%

  Improper Payment Amount

• FY 2020: $25.74 billion
• FY 2021: $25.03 billion
• FY 2022: $31.46 billion.

   

  “It is important to note that the improper payment rate is not a “fraud rate,” but is a measurement of payments that did not meet Medicare requirements. Improper payments are attributed to one of five major error categories (no documentation, insufficient documentation, medical necessity, incorrect coding, or other).

  Similar to prior years, in FY 2022 “insufficient documentation” was the main cause of improper payments. The CERT defines “insufficient documentation” as when the medical record documentation submitted is inadequate to support payment for the services billed. In other words, the CERT contractor reviewers could not conclude that the billed services were actually provided, were provided at the level billed, and/or were medically necessary. Claims are also placed into this category when a specific documentation element that is required as a condition of payment is missing, such as a physician signature on an order, or a form that is required to be completed in its entirety.

  While the CERT data reports on improper payments in several settings (i.e., skilled nursing facilities, hospital outpatient, hospice), this article focuses on Part A (Hospital IPPS) findings.

   

   

  “0 or 1 day” Length of Stay Claims

  A compare of improper payments rates for Part A hospital claims by length of stay (LOS) has been a part of this report since the October 1, 2013 implementation of the Two-Midnight Rule:

   

• 2014: “0 or 1 Day” stay claims highest improper payment rate to date at 37.18%,
• 2021: “0 or 1 Day” stay claims lowest improper payment rate to date at 16.8%.
• 2022: The “0 or 1 Day” claims rate increased to 20.1% with projected improper payments of $1.5 billion.

In addition, to the CERT’s focus on claims by length of stay, short stays (“0 of 1 Day” Stays) are also actively being reviewed by the OIG as part of their Work Plan (https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000538.asp) and Livanta, the National Medicare Claim Review Contractor (https://livantaqio.com/en/ClaimReview/index.html), who is actively requesting short stay claims across the nation on a monthly bases.  

Top 20 Service Types with Highest Improper Payments: Part A Hospital IPPS

Table D4 of this report includes the top 20 DRG types with the highest improper payment rate. The table also details the percentage of error by each of the CERT’s major error categories.

Overall, 44.4% of the errors in the top 20 service types were due to error category medical necessity. A claim is placed in this category when the CERT contractor reviewer receives adequate documentation from the medical records submitted to make an informed decision that the services billed were not medically necessary based upon Medicare coverage and payment policies. One hundred percent of the errors for the following two DRG Types was attributed to medical necessity:

• DRG Group 252, 253, and 254: Other Vascular Procedures, and
• DRG Pair 551 and 552: Medical Back Problems.

   

  Top Root Causes of Improper Payments

  The 2022 report includes tables highlighting the top root cause of improper payments for the top three service types with the highest projected improper payments in the Part A (Hospital IPPS) setting.

   

   

  Moving Forward

  Moving forward, here are ideas and resources to help in your efforts to prevent claims errors:

• Visit the CERT Provider Website (https://c3hub.certrc.cms.gov/) to find information about the CERT, how to submit records, sample request letters and much more,
• Become familiar with National and Local Coverage Determinations and Local Coverage Articles that detail indications and limitations of specific services. For example, CMS has published an MLN Booklet titled Major Joint Replacement (Hip or Knee) (https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/jointreplacement-ICN909065.pdf) to provide guidance on what to document to avoid denied claims, and
• Take the time to review the CERT’s Supplemental Improper Payment Data report annually.

1. Major Hip and Knee Joint Replacement or Reattachment of Lower Extremity (DRGs 469, 470) Top Root Cause: “Inpatient admission not medically necessary and the invasive procedure should have been billed as an outpatient procedure.”
2. Endovascular Cardiac Valve Replacement and Supplement Procedures (DRGs 266, 267) Top Root Cause: “Documentation to support medical necessity for the procedure – missing.”
3. Percutaneous Intracardiac Procedures (DRGs 273, 274) Top Root Cause: NCD requirement(s), other documentation required for payment – Missing.”