On November 16, 2020, the Centers for Medicare & Medicaid Services (CMS) released its 2020 Estimated Improper Payment Rates. Under the 2019 Payment Integrity Act, CMS is required to review Medicare Fee-For-Service (FFS), Medicare Part C, Medicare Part D, Medicaid, and the Children’s Health Insurance Program (CHIP) and estimate the amount of improper payments made under each program.
The reported improper payment data for CMS FY 2020 represents claims submitted July 1, 2018 through June 30, 2019. Due the COVID-19 pandemic, CMS temporarily halted all data requests to providers and state agencies regarding incorrect payments from March to August 2020. To compile the report, CMS adjusted calculation methods for reporting improper payment rates for the 2020 Agency Financial Report (AFR), using data already available at the time of the COVID-19 pandemic or data voluntarily provided. The calculated rates still meet national precision requirements.
The FY 2020 improper payment rate for Medicare FFS, which includes Part A and Part B, was estimated to be 6.27% or $25.74 billion. This represents a notable decrease from FY 2019, for which the improper payment rate was estimated as 7.25%, or $28.91 billion. The result of this decrease is likely due to reductions in the improper payment estimates for home health and skilled nursing facilities, which saw a $5.90 billion and $1 billion decrease, respectively. These decreases are likely due to several policy clarifications by CMS.