Medicare Fee-For-Service Estimated Improper Payments Decline by $15 Billion Since 2016

​​The Centers for Medicare & Medicaid Services (CMS) announced recently that the Medicare Fee- For-Service (FFS) improper payment rate has continued to decline. Over the past four years, CMS’ actions have led to an estimated $15 billion reduction of Medicare FFS improper payments. This reduction is a result of CMS’s efforts to identify the root causes of improper payments, implement action plans to reduce and prevent improper payments, and extend the Agency’s capacity to address emerging areas of risk through work groups and interagency collaborations.

Per the CMS November 16 press release and accompanying fact sheet, the Medicare FFS estimated improper payment rate decreased to 6.27% in FY 2020, from 7.25% in FY 2019, the fourth consecutive year the Medicare FFS improper payment rate has been below the 10% threshold for compliance established in the Payment Integrity Information Act of 2019. This year’s decrease was driven largely by progress in the following important areas:

  • Home health improvements, including clarifying documentation requirements and educating providers through the Targeted Probe and Educate program, resulted in a $5.9 billion decrease in estimated improper payments from FY 2016 to FY 2020.

  • Skilled nursing facility claims saw a $1 billion reduction in estimated improper payments in the last year due to a policy change related to the supporting information for physician certification and recertification for skilled nursing facility services, as well as CMS’ Targeted Probe and Educate efforts.