Poor documentation causes most claims errors

Lack of backup cost taxpayers extra $23.2 billion

One of the most telling statistics in the recently released HCFA financial audit conducted by the Office of the Inspector General deals with overpayments to physicians, hospitals, and other health care providers who service Medicare patients. About 30% of the 800 million Medicare claims HCFA processes annually were overpaid, representing a projected $23.2 billion in extra costs to taxpayers, the audit found.

The bulk of these errors — about 14% of the $168.6 billion in Medicare fee-for-service payments made in fiscal 1996 — came from improper documentation, the audit found. HCFA representatives had to contact providers an average of three times before receiving the information it needed to decide if a claim was valid or not, the OIG report found.

Other contributing causes to provider overpayments cited in the report include:

lack of medical necessity, accounting for 33%, or $7.7 billion, of improper payments;

incorrect coding, leading to 8.4%, or $1.6 billion, in provider overpayments;

noncovered and allowable services, accounting for 1.9%, or $444 million, in overpayments. The bulk of these improper billings were related to skilled nursing facilities filing separate Medicare claims for routine services already included in their flat-rate reimbursement fees.