Imagine if your controller told you that based on a statistically valid sample of your company’s paid invoices that the “improper payment rate” was 12.7%. This is exactly what the finding is for the Center for Medicare & Medicaid Services (CMS) for payments made for healthcare claims during their 2014 fiscal year, based on approximately 40,000 paid Medicare claims. “Improper payment rate” designate those paid healthcare claims that were not paid properly under Medicare coverage, coding, and billing rules. Additionally, this represents a significant increase (over 25%) from the 10.1% improper payment level found in the prior audit (FY2013).
CMS conducts annual audits of their paid healthcare claims to identify errors, safeguard your tax dollars and ensure compliance with their mandated mission. Their private counterparts on the other hand often perform no audits at all. And if they did, the onerous provisions in most healthcare audit clauses could make the process cost prohibitive. If you have a plan with 15,000 employees, your annual health plan costs are likely in excess of $200 million annually. Given the error rate, does this mean that as much as $25 million of that is in error?