Improper Payments Corrective Action Plans

Topics on this Page:

Reducing the estimated rate of improper payments for each type or category of error. This discussion must include the corrective action(s) for each different type or cause of error, and the corresponding steps necessary to prevent or reduce future recurrence. If the efforts are ongoing, include that information in this section also. If the actions are planned for future implementation, include the anticipated date of realization.

A. Medicare FFS

Categories of error and associated corrective actions:

• No Documentation and Insufficient Documentation Errors
  • Educate providers about the CERT program so that providers are not hesitant about supplying medical records
  • Modify the medical record request letters to clarify the components of the medical record needed for CERT review and to encourage the billing provider to forward the request to the appropriate location if the medical record is not on-site.
  • Customize the “second chance” letters to list the parts of the medical record that are needed to complete the review.
• Medically Unnecessary Services
  • Complete and distribute an extensive workbook designed to be a resource for hospitals in their compliance efforts and activities.
  • Task each Carrier, DMERC, and FI with developing an Error Rate Reduction Plan (ERRP) that targets medical necessity errors in their jurisdiction.
  • Develop national and state-specific models for predicting payment errors to help increase understanding of areas prone to payment error and where Quality Improvement Organizations (QIOs)should focus corrective actions.
• Incorrect Coding Errors
  • Increase and refine educational contacts with providers who are billing in error.
  • Develop and install new correct coding edits.
• Other
  • Release a List of Over-utilized Codes to show error rates and improper payments by service for each CERT cluster.
  • Conduct a demonstration in three states to see if using recovery auditing contractors can help lower the error rates in these states by (1) improving provider compliance more quickly than states that do not have recovery auditing contractors, and (2) allowing regular contractors to spend fewer resources on post-payment review and focus more time and effort on prepayment review and education.
  • Consider contractor-specific error rates when evaluating contractors.

Results of the actions taken to address the causes: As a result of these actions, the Medicare paid claims error rate decreased from 4.4 percent ($10.8 billion) in FY 2006, to 3.9 percent ($10.8 billion)  in FY 2007.  The FY 2007 paid claims error rate of 3.9 percent exceeded the HHS Medicare Fee-for-Service FY 2007 error rate GPRA goal of 4.3 percent.

B. Medicare Advantage

During FY 2007, HHS prepared a comprehensive project plan to develop error rates for the Medicare Advantage program and prepared a comprehensive risk assessment to determine potential areas vulnerable to payment error in the Medicare Advantage program. HHS has completed a measurement project on one of the areas identified in the comprehensive Medicare Advantage risk assessment, the Payment System Calculation Discrepancies (PSCD). It is important to note that these discrepancies are not payment errors because final payment is not determined until after reconciliation.

However, the PSCD is the first step in developing an improper payment error rate. When a PSCD is identified,HHS makes adjustments through multiple reconciliation processes to remedy the discrepancy and prevent future discrepancies. Once a comprehensive Medicare Advantage error rate has been established, HHS will develop and implement a corrective action plan to reduce improper payments, as appropriate.

C. Medicare Prescription Drug Benefit

During FY 2007, HHS prepared a comprehensive project plan to develop error rates for the Medicare Prescription Drug Benefit program and prepared a comprehensive risk assessment to determine potential areas vulnerable to payment error in the Medicare Prescription Drug Benefit program. HHS has completed a measurement project on one of the areas identified in the comprehensive Medicare Prescription Drug Benefit risk assessment, the Payment System Calculation Discrepancies (PSCD). It is important to note that these discrepancies are not payment errors because final payment is not determined until after reconciliation.

However, the PSCD is the first step in developing an improper payment error rate. When a PSCD is identified,HHS makes adjustments through multiple reconciliation processes to remedy the discrepancy and prevent future discrepancies. Once a comprehensive Medicare Prescription Drug Benefit error rate has been established, HHS will develop and implement a corrective action plan to reduce improper payments, as appropriate.

D. Medicaid

Based on preliminary fee for service findings from reviewing two quarters worth of data, categories of error are

• No Documentation
• Insufficient Documentation
• Medically Unnecessary Services; and
• Policy Violations

States will develop and implement corrective actions once the final component error rate is established.

E. State Children’s Health Insurance Program

The SCHIP program did not measure an improper payment rate in FY 2007

F. Temporary Assistance for Needy Families

Based on findings identified in the pilot reviews, categories of error are:

• Ineligible Recipients: families that exceeded income thresholds on payment dates, did not meet household composition requirements or exceeded the 60 month benefit limit.
• Incorrect Payment Amount: families received an incorrect benefit amount based on incorrect household size or income.

HHS will issue reports to the states on recommended corrective actions to address the above findings. States mayemploy these recommendations in their corrective action efforts.

G. Foster Care

In 2007, the number of payment errors continued to steadily decline in all error categories. The overall frequency of all types of payment errors in the composite foster care sample (i.e., across all States) has been reduced from 678 in2006 to 528 in 2007. This represents a decrease of 22 percent in the number of payment errors for the program. Since HHS began measuring foster care improper payments in FY 2004, six types of eligibility errors have accounted for the majority of all errors identified in the title IV-E reviews.

Over the last year, HHS has made significant progress in reducing each type of error:

• Permanency finalization not timely:
  • 171 errors in 2006 to 52 errors in 2007 (reduction of 70 percent)
• Provider not licensed or approved:
  • 126 errors in 2006 to 65 errors in 2007 (reduction of 48 percent)
• No reasonable efforts to prevent removal
  • 91 errors in 2006 to 30 errors in 2007 (reduction of 67 percent)
• Criminal records check not completed
  • 64 errors in 2006 to 25 errors in 2007 (reduction of 61 percent)
• Not AFDC eligible at time of removal
  • 55 errors in 2006 to 42 errors in 2007 (reduction of 24 percent)
• No contrary to welfare determination
  • 45 errors in 2006 to 26 errors in 2007 (reduction of 42 percent)

In FY 2007, the most frequently identified payment error was underpayments (137 errors, or 26 percent of errors).

These reductions represent positive movement toward reducing improper payments in the foster care program. HHS will continue its efforts to implement the effective corrective action strategies that have proven successful, as follows:

• HHS performs onsite reviews and post-site reviews activities to effectively validate the accuracy of a state’s claim for reimbursement of payments made on behalf of children and their foster care providers.
• States are required to develop and execute state-specific Program Improvement Plans.
• Program Improvement Plans that target corrective action to the root cause of payment errors in the state. These plans generally are approved for a period of one year, and the state submits quarterly progress reports to an HHS regional office for monitoring purposes.
• HHS provides onsite training and technical assistance to states to develop and implement program improvement strategies.
• HHS works toward heightening judicial awareness of, and investment in, the title IV-E eligibility and Child and Family Services Reviews.
• HHS works closely with the Court Improvement Program in states where judges require training and court orders warrant modification in order to meet title IV-E requirements and reduce the error rate for judicial determinations.
• HHS conducts secondary reviews for states that are not determined to be in substantial compliance as a result of their primary reviews, and takes appropriate disallowances consistent with the review findings.

As a result of these actions, the Foster Care error rate decreased from 7.68 percent ($134 million) in FY 2006 to 3.3percent ($51.6 million in FY 2007).

H. Head Start

Categories of error and associated corrective actions:

• Absence of a signed income verification statement, meeting regulatory requirements, in grantee file
  • Grantee is to develop corrective action plan based on its findings.

In addition, HHS has taken the following actions:

• Issued a memorandum reminding all grantees of documentation requirements.
• HHS regional offices are providing increased oversight regarding documentation.
• Mandated a review of a sample of grantee records to verify compliance with income eligibility determination requirements.
• Increased grantee’s emphasis for on-going monitoring through training and development of a monitoring protocol to review management systems.

As a result of these actions, the Head Start error rate decreased from 3.1 percent ($210 million) in FY 2006 to 1.3percent ($88 million) in FY 2007.

I. Child Care and Development Fund

Categories of error based on findings identified in the pilot reviews and associated corrective actions:

• Missing Documentation
  • Training to increase staff awareness of the problem and knowledge of policy, interviewing skills, and qualityof routine case reviews.
• Income Errors
  • Initiatives targeting income verification and calculation policies.
• Miscalculation of Hours of Care
  • Training of case record reviewers.
• Incorrect Parental Fee Calculations
  • Training of case record reviewers.

Other planned strategies States are considering to address causes of errors:

• Strengthen supervision of new eligibility workers.
• Clarify selected policies with eligibility workers.
• Improve information technology system elements to

1) prevent or decrease calculation errors,
2) generate exception reports to highlight areas of potential problems or concern,
3) operationalize automatic income calculations, and
4) enhance the capability of extracting data from other data systems.

• Provide extensive technical assistance in counties to address error-prone areas.
• Institute changes in the monitoring process.
• Introduce statutory changes to simplify access to other state databases.
• Examine state policies to determine what changes may be necessary to provide a more consistent application of policies and procedures.

Other sections of the Improper Payments Information Act Report

• Section I: Risk Assessments
• Section II: Statistical Sampling Process
• Section III: Corrective Action Plans
• Section IV: Program Improper Payment Reporting
• Section V: Recovery Auditing Reporting
• Section VI: Actions to Reduce and Recover Improper Payments
• Section VII: Agency Information Systems and Other Infrastructure
• Section VIII: Statutory or Regulatory Barriers
• Section IX: Overall Agency Efforts

AFR Section III Links

• Top Management & Performance Challenges
• Summary of Financial Statement Audit and Management Assurances
• Improper Payment Information Act Report
• Other Financial Information
• Consolidating and Combining Statements
• Management Report on Final Action
• Other Required Reporting