Medicare Provider Education: Oversight of Efforts to Reduce Improper Billing Needs Improvement

For fiscal year 2016, HHS reported an estimated 11 percent improper payment rate and $41.1 billion in improper payments in the Medicare fee-for-service program. To help ensure payments are made properly, CMS contracts with MACs to conduct provider education efforts. CMS cites the MACs’ provider education department efforts as an important way to reduce improper payments.

GAO was asked to examine MACs’ provider education department efforts and the results of MACs’ probe and educate reviews. This report examines (1) the focus of MACs’ provider education department efforts to help reduce improper billing and CMS oversight of these efforts and (2) the extent to which CMS measured the effectiveness of the MAC probe and educate reviews. GAO reviewed and analyzed CMS and MAC documents and MAC probe and educate review data for 2013-2016; interviewed CMS and MAC officials; and assessed CMS’s oversight activities against federal internal control standards

Medicare administrative contractors (MAC) process Medicare claims, identify areas vulnerable to improper billing, and develop general education efforts focused on these areas. MAC officials state that their provider education departments focus their educational efforts on areas vulnerable to improper billing; however, the Centers for Medicare & Medicaid Services' (CMS)--the agency within the Department of Health and Human Services (HHS) that administers Medicare--oversight and requirements for these efforts are limited.

CMS collects limited information about how these efforts focus on the areas MACs identify as vulnerable to improper billing. According to CMS officials, the agency has not required the MACs to provide specifics on their provider education department efforts in these reports because it does not want to be overly prescriptive regarding MAC provider education department efforts. Federal internal control standards state that management should use quality reporting information to achieve the entity's objectives. Unless CMS requires sufficient MAC provider education department reporting, it cannot ensure that the departments' efforts are focused on areas vulnerable to improper billing.

CMS does not require MACs to educate providers who refer patients for durable medical equipment (DME), including prosthetics, orthotics, and supplies, and home health services on proper billing documentation, nor does it explicitly require MACs to work together to provide this education. HHS has reported that a large portion of the high improper payment rates in these services is related to insufficient documentation. The absence of a requirement for MACs to educate referring providers about proper documentation for DME and home health claims is inconsistent with federal internal control standards, which state that in order to achieve an entity's objectives, management should assign responsibility and delegate authority. Without an explicit requirement from CMS to educate these referring providers, billing errors due to insufficient documentation may persist.

Short-stay hospital and home health claims have been the focus of the MACs' probe and educate reviews--a CMS strategy to help providers improve billing in certain areas vulnerable to improper billing. Under the probe and educate reviews, MACs review a sample of claims from every provider and then offer individualized education to reduce billing errors. CMS officials consider the completed short-stay hospital reviews to be a success based on anecdotal feedback from providers. However, the effectiveness of these reviews cannot be confirmed because CMS did not establish performance metrics to determine whether the reviews were effective in reducing improper billing. Furthermore, GAO found the percentage of claims remained high throughout the three rounds of the review process, despite the offer of education after each round. Federal internal control standards state that management should define objectives in specific and measurable terms and evaluate results against those objectives. Without performance metrics, CMS cannot determine whether future probe and educate reviews would be effective in reducing improper billing.

GAO recommends that CMS should (1) require sufficient detail in MAC reporting to determine the extent to which MACs' provider education department efforts focus on vulnerable areas, (2) explicitly require MACs to work together to educate referring providers on proper documentation for DME and home health services, and (3) establish performance metrics for future probe and educate reviews. HHS concurred with GAO's recommendations.

In fiscal year 2016, the Department of Health and Human Services (HHS)  reported that an estimated 11 percent of the payments made to health  care providers under the Medicare fee-for-service program were made  improperly, representing $41.1 billion in improper payments. Improper  payments include payments made in error, such as payments that should  not have been made; payments made in incorrect amounts, including  overpayments and underpayments; and payments for claims that were  not properly documented. Certain services in the Medicare fee-for-service  program had higher improper payment rates, such as home health  services, which had an estimated improper payment rate of 42 percent  and represented an estimated $7.7 billion in improper payments, also as  reported in fiscal year 2016. Insufficient documentation—one type of  improper billing—was the most common source of improper payments in  Medicare fee-for service, causing 65.2 percent of all improper payments  in the same year.

To help ensure that payments are made properly, the Centers for  Medicare & Medicaid Services (CMS), the agency within HHS that  administers the Medicare program, contracts with Medicare administrative  contractors (MAC). MACs—in addition to processing and paying  Medicare claims—conduct education efforts intended to improve billing  practices for the Medicare program. These efforts are in addition to  CMS’s own education for providers on proper billing. MACs’ provider  outreach and education (which we hereafter refer to as provider  education) departments play a significant role in these efforts. There were  8 MACs that operated in 1 or more of the 20 total jurisdictions across the  United States at the time of our review. Although the costs associated  with a MAC’s provider education department account for a small portion  of a MAC’s total costs, CMS cites provider education department efforts  as an important way to help lower the improper payment rate. According  to CMS, the fundamental goal of the provider education departments is to  reduce the rate of improper payments by giving Medicare providers the  information they need to understand the Medicare program, such as  coverage and payment rules, and bill properly. For example, MACs’  provider education departments may distribute written guidance via email  to educate providers on billing Medicare for physical therapy services or  host a webinar to improve billing for Medicare radiology services.  Providers can also be referred to the provider education department for  education by MACs’ medical review departments. The medical review  department may deny certain claims and refer certain providers to the  provider education department for education if it finds errors in the  providers’ billing documentation.

MACs also conduct probe and educate reviews as part of a CMS strategy  to determine the extent to which providers understand recent policy  changes for certain areas vulnerable to improper billing as identified by  CMS and to help providers improve billing in these areas. CMS first  began probe and educate reviews in 2013. Through these reviews, MACs  analyze a small sample of claims from all providers who bill for inpatient  hospital and home health services in order to identify and correct billing  issues through provider education, thereby reducing improper billing in  those areas.

Given longstanding concerns about Medicare improper payments, you  asked us to provide information about MACs’ provider education  department efforts and the results of the MACs’ probe and educate  reviews. This report examines  the focus of MACs’ provider education department efforts to help  reduce improper billing and the extent to which CMS oversees these  efforts, and  the extent to which CMS measured the effectiveness of the MAC  probe and educate reviews in reducing improper billing.

To examine MACs’ provider education department efforts to reduce  improper billing and the extent to which CMS oversees these efforts, we  reviewed the first annual MAC Improper Payment Reduction Strategy  (IPRS) report for the 8 MACs that had contracts as of July 1, 2016. These  reports are intended to identify risks to Medicare and describe the  planned interventions meant to ensure proper payments and address  these risks. We reviewed 14 IPRS reports that covered 18 of 20  jurisdictions. The submission dates for the IPRS reports we reviewed  ranged from November 2015 to July 2016, based on variations in MACs’  contract years. We analyzed these reports to identify areas vulnerable to  improper billing—often referred to as prioritized problem areas—that were  common among the majority of MAC jurisdictions. We also analyzed  these reports to determine the extent to which MACs listed specific  provider education department efforts focusing on each of these areas  vulnerable to improper billing. We reviewed CMS’s statements of work for  the MACs, which outline the functions CMS expects the MACs to perform,  including a brief description of what is expected from MACs’ provider  education departments. We also reviewed the chapter of CMS’s Medicare  Contractor Beneficiary and Provider Communications Manual related to  the provider education department, which further outlines CMS’s  expectations for MACs’ provider education department efforts.  Additionally, we interviewed CMS officials, MAC officials from each of the  8 MACs that collectively serve all 20 jurisdictions nationally, and 9  selected provider associations representing medical billers or specialties  with both high and low improper payment rates, regarding MACs’ provider  education department efforts and CMS’s oversight of these efforts. We  also reviewed relevant federal standards for internal control in the federal  government related to information and communications and the control  environment.

To examine the extent to which CMS measured the effectiveness of the  MAC probe and educate reviews in reducing improper billing, we  interviewed CMS officials about efforts they have undertaken to do so.  We also reviewed relevant federal standards for internal control related to  risk assessment and monitoring. To determine whether the results of the  probe and educate reviews identified a resulting decrease in improper  billing, we analyzed data CMS collected from the MACs about their  reviews to better understand the extent of improper billing that existed  before, during, and after the first completed probe and educate review. To  date, CMS has required MACs to conduct two probe and educate  reviews: a review of short-stay hospital claims, which has been  completed, and a review of home health claims, which is ongoing. For  both types of reviews, we analyzed the number of providers requiring  review due to improper billing—including the change in the number of  providers requiring review over the course of the reviews for the short- stay hospital reviews, the number of claims reviewed, and the denial rates  for claims reviewed. The short-stay hospital review data was for fiscal  years 2014 and 2015 and the preliminary home health review data was  for fiscal year 2016. To assess the reliability of the data, we reviewed it to  identify missing information and discrepancies, and interviewed CMS  officials regarding the processes for collecting and verifying it. Based on  these efforts, we determined that these data were sufficiently reliable for  the purposes of our reporting objectives.

We conducted this performance audit from February 2016 to March 2017  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

MACs process and pay claims, conduct prepayment and postpayment  claim reviews, and provide Medicare fee-for-service billing education to  providers in their jurisdictions. For each type of Medicare claim, the  number of jurisdictions and the number of MACs that handle that type of  claim vary. For Medicare Part A and B claims—handled by A/B MACs— there are 12 jurisdictions in which 8 MACs operated at the time of our  review. Three of these MACs also processed home health and hospice  claims in addition to Medicare A/B claims and therefore served as MACs  for the four home health and hospice (HH+H) jurisdictions. For durable  medical equipment (DME), including orthotics, prosthetics, and supplies— handled by DME MACs—there are four jurisdictions in which two MACs  operated at the time of our review. A MAC can operate in more than one  jurisdiction and handle more than one type of Medicare claim. For  example, a MAC can operate as an A/B MAC in one jurisdiction and a  DME MAC in another. (For maps of the 20 jurisdictions, see app. I.)

The provider education department is part of a MAC’s provider customer  service program, which is intended to provide timely information,  education, and training to providers on Medicare fee-for-service billing, as  outlined in CMS’s provider customer service program manual. The costs  for MACs’ provider education departments average 2.1 to 3.3 percent of  their total annual costs.

MACs’ provider education department efforts are aimed at educating  providers and their staff on Medicare program fundamentals, national and  local policies and procedures, new Medicare initiatives, significant  changes to the Medicare program, and issues identified through data  analyses. Provider education departments provide education through a  variety of methods, such as webinars, online tutorials available on- demand, ‘ask-the-contractor’ teleconferences, seminars at national  conferences and association meetings, and website articles. These  efforts are designed to educate many providers at the same time or  individual providers via one-to-one education. Attendance at provider  education department events is voluntary on the part of the providers.  MACs are required to report their provider education department efforts  monthly into the Provider Customer Service Program Contractor  Information Database that CMS oversees and maintains. CMS also  requires the MACs to submit a semi-annual Provider Customer Service  Program Activities Report that summarizes and recounts Provider  Customer Service Program activities, process improvements, and best  practices during the reporting period.

MACs’ medical review departments identify areas vulnerable to improper  billing, review medical records to determine whether Medicare claims are  medically necessary and properly documented, conduct one-to-one  education as a result of claim reviews, and provide referrals to the  provider education department for further education. This department  frequently works with the provider education department to conduct  educational efforts focusing on correcting provider billing (see fig. 1).

CMS requires each MAC to identify areas vulnerable to improper billing in  its jurisdiction(s) to guide MAC efforts in medical review and provider  education. Areas identified by the MACs are listed in their IPRS reports.  MACs’ medical review departments identify these areas by analyzing  various internal and external data, such as data from CMS’s  Comprehensive Error Rate Testing (CERT) program, issues identified by  recovery auditors, Office of Inspector General reports, comparative billing  reports, and internal MAC data. The objective of the CERT program is  to estimate the payment accuracy of the Medicare fee-for-service  program, which results in a Medicare fee-for-service improper payment  rate. Improper payment rates are computed at multiple levels:  nationally, by MAC, by service, and by provider type. According to CMS’s  provider customer service program manual, MACs with improper payment  rates a certain percentage above HHS’s target for determining progress  toward one of its Government Performance and Results Act of 1993  (GPRA) goals may be required by CMS to submit quarterly or monthly  provider education department status updates. However, CMS officials  told us that they have never required any MAC to submit these quarterly  or monthly status updates and they are considering removing this  requirement from the manual.

The probe and educate reviews are a CMS strategy to determine the  extent to which providers understand recent policy changes for certain  areas vulnerable to improper billing and help providers improve billing in  these areas through a review of a sample of claims from every provider.  Under the reviews, MAC medical review departments, with varying levels  of coordination with the provider education departments, sample and  review a certain number of claims from each provider to determine  whether the claims were billed and documented properly. These reviews  are resource intensive, because they involve manual review of associated  medical records by trained medical review staff. Because of the resources  involved, manual reviews are done infrequently in the Medicare program,  with less than 1 percent of all Medicare claims receiving manual review.  Following the first round of review, providers are informed of their results  and those who billed and documented a specified percentage of claims improperly are offered voluntary one-to-one education to learn why each  claim was approved or denied. Providers that billed and documented a  specified percentage of claims properly are excluded from subsequent  rounds of review, if any. MACs may repeat this process for subsequent  rounds of review using a new sample of claims. (See fig. 2.)

In addition to the areas vulnerable to improper billing identified by the  MACs, CMS identified two areas vulnerable to improper billing—short- stay hospital visits and home health services—and required MACs to  conduct probe and educate reviews for each of these areas. The first  probe and educate review examined short-stay hospital claims to  determine the extent to which certain hospitals were properly applying the  “two-midnight rule” that CMS implemented effective October 1, 2013.  Under the rule, hospital stays for Medicare beneficiaries spanning two or  more midnights should generally be billed as inpatient hospital claims.  Conversely, hospital stays not expected to span at least two midnights  should generally be billed as outpatient hospital claims. From October 1,  2013, through September 30, 2015, 64,776 short-stay inpatient hospital  claims were reviewed by the MACs over three rounds. Beginning on  October 15, 2015, quality improvement organizations began conducting  these reviews at the direction of CMS.

At the direction of CMS, MACs began conducting probe and educate  reviews of home health agency claims on October 1, 2015, for episodes  of care that occurred on or after August 1, 2015. Round 1 was  completed as of September 30, 2016, and the second round began on  December 15, 2016. The purpose of these reviews is to ensure that home  health agencies understand the new patient certification requirements  that became effective January 1, 2015. These requirements stipulate that  the referring physician, also referred to as the ordering or referring  provider, must certify a patient’s eligibility for home health services as a  condition of payment. As part of the certification, the referring provider  must document that a face-to-face patient encounter occurred within a  certain time frame. In addition, the patient’s medical record must support  the certification of eligibility.

MAC Officials State Their Provider Education Efforts Focus on Areas Vulnerable to Improper Billing; CMS Oversight and Requirements for These Efforts Are Limited

MAC officials state that their provider education department efforts focus  on areas vulnerable to improper billing. We found that these efforts are  subject to limited oversight by CMS. Additionally, CMS does not require  MACs to educate referring providers on documentation requirements for  DME and home health services.

MAC Officials State Their Provider Education Department Efforts Focus on Areas Vulnerable to Improper Billing

MAC officials told us that their provider education departments focus  education on areas vulnerable to improper billing, including those they’ve  identified and listed in their annual IPRS reports. There were 278 areas  listed in the IPRS reports we reviewed, and based on our analysis, some  of these areas, such as skilled nursing facilities, ambulance services, and  blood glucose monitors, were identified by a majority of MACs. A detailed  description of the problem areas may also be identified in these IPRS  reports, as illustrated by the examples below.

Part A. A majority of Part A MACs reported claims from skilled  nursing facilities and inpatient rehabilitation facilities as vulnerable to  improper billing. Examples of reported problem areas within skilled  nursing facilities included claims for individuals using an “ultrahigh”  level of therapy and episodes of care greater than 90 days.

Part B. A majority of Part B MACs reported claims for evaluation and  management and ambulance services as areas vulnerable to  improper billing. Examples of reported problem areas within the  evaluation and management category included the incorrect level of  coding for office visits, hospital visits, emergency room visits, and  home visits for assisted living and nursing homes.

DME. A majority of DME MACs reported claims for glucose monitors,  urological supplies, continuous positive airway pressure (CPAP)  devices, oxygen, wheelchair options and accessories, lower limb  prosthetics, and immunosuppressive drugs as areas vulnerable to  improper billing. An example of a reported problem area with oxygen  billing was that the beneficiary medical record documentation did not  provide support for symptoms that might be expected to improve with  oxygen therapy.

HH+H. Half of the HH+H MACs reported claims for home health  therapy services and home health or hospice stays that were longer  than average as areas vulnerable to improper billing. An example of a  reported problem area with home health therapy services included  claims from home health providers reporting a high average number  of therapy visits for their patients as compared to their peers within the  state and the MAC’s jurisdiction.

CMS Collects Limited Information on MACs’ Provider Education Efforts Focused on Areas Vulnerable to Improper Billing

CMS collects limited information on MACs’ provider education department  efforts that focus on areas vulnerable to improper billing. CMS officials  told us that they oversee the extent to which MACs’ provider education  department efforts focus on areas vulnerable to improper billing by  reviewing MACs’ IPRS reports. Although the IPRS reports focus mainly  on how the medical review departments will address the areas identified  as vulnerable to improper billing, CMS’s instructions to the MACs state  that they should also include information on related provider education  department activities or provider education department referrals.

However, the IPRS reports we reviewed lacked specifics indicating how  provider education department efforts focused on 74 percent of the 278  MAC-identified areas vulnerable to improper billing. We considered a  provider education department effort to be specific if it included one or  more of the following: the month, day, and year the event occurred or  would occur; the type or number of providers attending; or a description of  the event. As an example of a provider education department description  that met our definition of ‘specific,’ one MAC reported its provider  education department would conduct webinars focused on the top 5 to 10  denial reasons for oxygen equipment in the upcoming year. This MAC’s  IPRS report in our analysis listed specific provider education department  efforts for all areas vulnerable to improper billing. However, 74 percent of  the areas vulnerable to improper billing listed in the 14 IPRS reports we  reviewed lacked specifics—48 percent of the time the provider education  department efforts listed were not specific and 26 percent of the time no  provider education department efforts were included. As an example of  a provider education department description that was not specific, one  MAC reported that the medical review department would make provider  referrals to its provider education department “as needed” for inpatient  hospital and rehabilitation facilities admissions, but gave no additional  detail (see fig. 3).

According to CMS officials, they do not require IPRS reports to have a  certain level of specificity regarding how provider education department  efforts focus on areas vulnerable to improper billing because they do not  want to be overly prescriptive regarding MACs’ provider education  department efforts. As a result, CMS receives limited and varying degrees  of information on the extent to which provider education department  efforts are focused on the MAC-identified areas vulnerable to improper  billing. CMS’s collection of limited information is inconsistent with federal  internal control standards related to information and communications,  which state that management should use quality information to achieve  the entity’s objectives—CMS’s objective in this instance being the  education of providers about proper billing. Unless CMS requires  sufficient MAC provider education department reporting, it cannot ensure  that MACs’ provider education department efforts are focused on areas  vulnerable to improper billing.

CMS Does Not Require MACs to Educate Referring Providers for Durable Medical Equipment and Home Health Services

CMS does not require A/B MACs to educate referring providers on  documentation requirements for ordering DME and home health services  because referring providers do not bill for any DME or home health  services on these orders. DME suppliers and home health agencies are  responsible for submitting a proper written order from the referring  provider to receive payment, and DME and HH+H MACs are required to  educate DME suppliers and home health agencies—but not the referring  provider—on a proper written order. However, when a DME supplier or  home health agency accepts a written order, its payment may be denied if  the claim is reviewed and the referring provider’s medical record  documentation does not support the supply or service provided. See  figure 4 for an example in the case of DME.

Some MAC officials told us they have started working with other MACs  voluntarily to provide education to referring providers regarding DME and  home health services documentation requirements in some jurisdictions,  although CMS has not specifically required this collaboration. As an  example, officials from one DME MAC told us that they and three A/B  MACs that operate within its jurisdiction co-hosted two webinars on  documentation requirements when ordering durable medical equipment  and prosthetics and orthotics in September 2015; these webinars focused  on the medical records and orders that are part of the supplier  requirement for documentation. However, this voluntary collaboration  does not ensure that referring providers are always being educated. For  example, two A/B MACs reported that they have done little collaboration  with the HH+H MAC that serves their jurisdiction for referring providers on  proper billing documentation for home health services. CMS officials  stated that they have not explicitly required the MACs to work together on  this activity because it has not risen to a level of significant concern.

If education were provided, officials from two DME MACs told us there  would still be a lack of incentive for referring providers to bill properly for  DME and home health services because they do not experience any  repercussions for insufficient documentation—one type of improper  billing. Instead, when DME or home health claims are denied due to  insufficient documentation, from either the supplier or the referring  provider, the DME or home health provider loses the payment, while the  referring provider does not.

This education gap is problematic because insufficient documentation is  the most common reason for improper payments for home health  services and DME, which have high improper payment rates. As reported  for fiscal year 2016, DME had a 46.3 percent improper payment rate with  the Medicare program paying an estimated $3.7 billion improperly; home  health services had a 42.0 percent improper payment rate with the  program paying an estimated $7.7 billion improperly (see fig. 5.). Of these  improper payment amounts, 81 percent and 96 percent were the result of  insufficient documentation for DME and home health services,  respectively. Although the DME improper payment rate has decreased  somewhat in recent years, both the home health and DME programs’  improper payment rates remain higher than the overall Medicare fee-for- service improper payment rate of 11.0 percent.

Because referring physicians do not receive education from MACs for the  required documentation to support referrals for DME and home health  services, the risk is increased that DME suppliers or home health  agencies will improperly submit claims with insufficient documentation  from referring providers. Although both the A/B and DME MAC contracts  contain a requirement for the MACs to share ideas and coordinate their  efforts as necessary, they do not explicitly require collaboration between  these MACs to address this education gap for referring providers. The  absence of a requirement for MACs to educate referring providers about  proper documentation for DME and home health claims is inconsistent  with federal internal control standards, which state that in order to achieve  an entity’s objectives, management should assign responsibility, and  delegate authority. Without explicitly requiring that MACs educate  referring providers, the billing errors that result from referring providers’  insufficient documentation may persist.

CMS Officials Consider Hospital Probe and Educate Reviews a Success, but Did Not Measure Effectiveness

Although CMS officials consider the MACs’ short-stay hospital probe and  educate reviews to be a success, they did not measure the effectiveness  of this new strategy in reducing improper billing. CMS officials consider  the reviews to be a success based on feedback from providers who were  happy with the education they received and based on the reduction in the  number of providers from the first to third rounds who were billing and  documenting claims improperly.

We found that the effectiveness of the MACs’ short-stay hospital probe  and educate reviews cannot be confirmed because CMS did not establish  performance metrics to determine whether the probe and educate  reviews were effective in reducing improper billing. Although CMS stated  the objective of the reviews was to determine the extent to which  providers understood recent policy changes for certain services and were  billing properly for those services, CMS officials told us they did not  establish performance metrics that defined their objectives in measurable  terms and would allow them to evaluate whether they met those  objectives— for instance, specifying the percentage decrease they’d want  to see in the number of providers reviewed from the first round to third  rounds. This is inconsistent with federal internal control standards that  specify management should define objectives in specific and measurable  terms, establish appropriate performance measures for the defined  objectives, and conduct ongoing monitoring to evaluate whether they are  meeting those objectives.

We reviewed the data provided by the MACs to CMS about the inpatient  short-stay probe and educate reviews and found that the reviews may not  have been a clear success. For instance, the percentage of providers  who continued to require review remained high throughout the three  rounds—over 90 percent. Additionally, the percentage of claims denied in each round also remained high throughout the three rounds (see table  1). CMS officials told us that because providers billing properly were  removed after each round, they could not determine how much the overall  denial rate effectively decreased from the first to third rounds, noting that  the decrease in the claims denial rate could be greater than results  indicate. However, the number of providers removed after each round  was small. It is too early to say whether the home health probe and  educate reviews are successful because only one round of reviews had  been completed at the time of our review. CMS officials told us they  have not established specific performance metrics for the home health  reviews either.

The probe and educate reviews are resource-intensive. Though their  costs have not been quantified by CMS, the reviews require manual  assessments of thousands of claims, as well as the offer of one-to-one  education from the MACs to certain providers. The importance of  measuring the effectiveness of these probe and educate reviews is  highlighted by their resource-intensive nature, as well as by the fact that  the percentage of providers requiring review and claims denied remained  high throughout the three rounds of the probe and educate reviews of  short inpatient hospital stays. Therefore, without performance metrics,  CMS cannot determine whether future probe and educate reviews would  be effective in reducing improper billing.

The MACs’ provider education departments play an important role in  reducing the rate of improper payments by educating Medicare providers  on coverage and payment policies so that they can bill properly. However,  CMS has missed opportunities to improve the effectiveness and its  oversight of those efforts. CMS needs sufficient reporting from the MACs  to determine if their provider education department efforts are focusing on  areas vulnerable to improper billing. Lack of detail in the MACs’ IPRS  reporting provides CMS with insufficient information for oversight. Without  sufficient reporting, CMS cannot assure that the MACs are focusing their  provider education department efforts on reducing areas vulnerable to  improper billing.

In order to reduce the high improper payment rates for home health and  DME, education on proper documentation for providers who refer their  patients for DME and home health services is necessary; however, MACs  are not required to provide this education to the referring providers. To  provide this education, collaboration is needed between the A/B MACs,  which are the primary contacts for the referring providers, and the DME  and HH+H MACs, which have expertise in the DME and home health  billing areas. Without requiring MACs to work together to educate  referring providers, CMS has little assurance that referring providers are  being educated in order to help reduce improper billing in DME and home  health services.

Finally, CMS has not determined the effectiveness of the probe and  educate reviews. CMS does not have sufficient information to indicate  whether the reviews help to reduce improper billing; establishing  performance metrics would help CMS determine if the reviews are  effective in doing so. Without performance metrics, little assurance exists  that the probe and educate reviews are effective in reducing improper  billing and whether they should be used for additional areas vulnerable to  improper billing in the future.

To ensure MACs’ provider education efforts are focused on areas  vulnerable to improper billing and to strengthen CMS’s oversight of those  efforts, we recommend that CMS take the following three actions:  1.  CMS should require sufficient detail in MAC reporting to allow CMS to  determine the extent to which MACs’ provider education department  efforts focus on areas identified as vulnerable to improper billing.  2.  CMS should explicitly require that A/B, DME, and HH+H MACs work  together to educate referring providers on documentation  requirements for DME and home health services.  3.  For any future probe and educate reviews, CMS should establish  performance metrics that will help the agency determine the reviews’  effectiveness in reducing improper billing.

We provided a draft of this product to HHS for comment. In its written  comments, which are reprinted in appendix II, HHS concurred with our  recommendations. HHS also provided technical comments, which we  incorporated as appropriate. HHS acknowledged the role of referring  providers in ensuring proper billing for Medicare services, stating it will  ensure the MACs work together to educate referring providers on  documentation requirements for DME and home health services. Further,  HHS noted that it will work with the MACs on providing additional  information related to their provider education department efforts. HHS  also noted it is currently developing performance metrics to help measure  the effectiveness of future probe and educate reviews.

As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of Health  and Human Services, the Administrator of the Centers for Medicare &  Medicaid Services, and other interested parties. In addition, this report is  available at no charge on the GAO website at http://www.gao.gov.

If you or your staff has any questions about this report, please contact me  at (202) 512-7114 or kingk@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix III.

Appendix I: Medicare Administrative Contractor Jurisdictions

Appendix II: Comments from the Department of Health and Human Services

Kathleen M. King, (202) 512-7114 or kingk@gao.gov.

In addition to the contact named above, Lori Achman, Assistant Director;  Teresa Tam, Analyst-in-Charge; Cathleen Hamann; Deborah Linares;  Vikki Porter, and Jennifer Whitworth made key contributions to this report.

In 2016, Medicare's fee-for-service program made $41.1 billion in improper payments. To help ensure that payments are made properly, the Centers for Medicare & Medicaid Services contracts with Medicare Administrative Contractors (MACs) to educate health care providers.

We reviewed these contractors and found issues with CMS's requirements and oversight of them. For example, MACs are not required to educate some providers about proper billing for certain services with high improper payment rates. We recommended that CMS require MACs to educate these providers and establish metrics to determine if certain MAC reviews help reduce billing errors.

Question: What does CMS not require MACs to do?

Answer: CMS does not require MACs to educate providers who refer patients for durable medical equipment (DME), including prosthetics, orthotics, and supplies, and home health services on proper billing documentation, nor does it explicitly require MACs to work together to provide this education.

Question: What has HHS found that is related to insufficient documentation?

Answer: HHS has reported that a large portion of the high improper payment rates in these services is related to insufficient documentation.

Question: What do federal internal control standards state?

Answer: The absence of a requirement for MACs to educate referring providers about proper documentation for DME and home health claims is inconsistent with federal internal control standards, which state that in order to achieve an entity's objectives, management should assign responsibility and delegate authority.

Question: What could result from the lack of requirements from CMS?

Answer: Without an explicit requirement from CMS to educate these referring providers, billing errors due to insufficient documentation may persist.

Question: What are the focuses of the MACs' probe and educate reviews?

Answer: Short-stay hospital and home health claims have been the focus of the MACs' probe and educate reviews--a CMS strategy to help providers improve billing in certain areas vulnerable to improper billing.

Question: How do MACs perform these reviews?

Answer: Under the probe and educate reviews, MACs review a sample of claims from every provider and then offer individualized education to reduce billing errors.

Question: How effective are these reviews?

Answer: CMS officials consider the completed short-stay hospital reviews to be a success based on anecdotal feedback from providers. However, the effectiveness of these reviews cannot be confirmed because CMS did not establish performance metrics to determine whether the reviews were effective in reducing improper billing. Furthermore, GAO found the percentage of claims remained high throughout the three rounds of the review process, despite the offer of education after each round.

Question: What is the result of CMS having no performance metrics?

Answer: Federal internal control standards state that management should define objectives in specific and measurable terms and evaluate results against those objectives. Without performance metrics, CMS cannot determine whether future probe and educate reviews would be effective in reducing improper billing.

Question: What was GAO asked to do?

Answer: GAO was asked to examine MACs’ provider education department efforts and the results of MACs’ probe and educate reviews.

Question: How did GAO accomplish what it was asked to do?

Answer: GAO reviewed and analyzed CMS and MAC documents and MAC probe and educate review data for 2013-2016; interviewed CMS and MAC officials; and assessed CMS’s oversight activities against federal internal control standards

Question: What does the report examine?

Answer: This report examines (1) the focus of MACs’ provider education department efforts to help reduce improper billing and CMS oversight of these efforts and (2) the extent to which CMS measured the effectiveness of the MAC probe and educate reviews.