The Centers for Medicare and Medicaid Services (CMS) reports that the rate of improper payments for Medicare fee-for-service (FFS) decreased from 3.9% in FY 2007 to 3.6% in FY 2008, saving nearly 400 million taxpayer dollars this year. Improper payment rates include payments that may have been paid incorrectly and do not necessarily reflect fraud.

“Most improper payments are due to claims for services that were medically unnecessary or incorrectly coded,” according to a press release issued by CMS. “The vast majority of Medicaid and SCHIP errors are due to inadequate documentation; providers either did not submit information to support their FFS or managed care claims, or did not submit additional data when requested.”

The composite Medicaid and SCHIP rates are based on a weighted average reflecting FFS and managed care payments. An eligibility component is also included that measures improper payments for services furnished to beneficiaries who were not eligible for either program or who were not eligible for the services received.

“We are using the most effective information-gathering tools available to help us identify and eliminate improper payments in our effort to protect the integrity of CMS programs,” says Kerry Weems, CMS acting administrator. “Measuring performance, publicly reporting results, and providing payment incentives that encourage high quality and efficient care are paramount to keeping CMS accountable to the beneficiaries and American taxpayers.”