Improper Payments Overall Agency Efforts

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FY 2007 Progress
Demonstration Project for Improving Program Integrity in Medicare
Contracting Actions
Additional Activities

Instructions:

IX. Additional comments, if any, on overall agency efforts, specific programs, best practices, or common challenges identified, as a result of IPIA implementation.

FY 2007 Progress

HHS currently has seven programs that have been deemed risk susceptible: Medicare Fee-for Service, Medicaid, State Children’s Health Insurance Program (SCHIP), Temporary Assistance for Needy Families (TANF), Head Start, Child Care, and Foster Care. Currently Medicare FFS, Foster Care and Head Start report error rates. In FY 2008, HHS expects that all seven risk susceptible programs will report error rates.

In the third quarter of FY 2007, HHS was elevated to “Yellow” on status for the Eliminating Improper Payments initiative under the President’s Management Agenda (PMA). This upgrade was a result of having an OMB-approved measurement plan in place for all risk susceptible programs and a corrective action plan in place with OMB-approved targets for all programs that have been measured.

Once baselines have been established for all programs, reduction targets and corrective action plans can be developed for those programs that do not currently have them. Meeting and maintaining the reduction targets is the next milestone towards achieving a “Green” rating under the PMA.

Demonstration Project for Improving Program Integrity in Medicare

Beginning in 2005, HHS engaged in a Demonstration Project for Improving Program Integrity in Medicare. Under secton 306 of the Medicare Prescription Drug Improvement Modernization Act of 2003 (MMA), HHS was given the authority to conduct a demonstration project to demonstrate the use of recovery audit contractors (RACs) in identifying underpayments and overpayments and recouping overpayments under the Medicare Fee-for-Service program. HHS initiated this 3-year demonstration in the three states with the highest Medicare utilization rates. HHS provided the recovery audit contractors with over $167 billion worth of claims submitted between FY 2002 and FY 2005 that are potentially subject to review. From the inception of the RAC program through September 30, 2007, HHS has collected $432 million in payments determined to be improper.

Although the RAC demonstration is scheduled to end in March 2008, Section 302 of the Tax Relief and Health Care Act of 2006 makes the RAC Program permanent and requires the Secretary to expand the program to all 50 states no later than 2010. HHS has already begun expanding the RAC program. As of September 2007, the RAC demonstration has expanded into 2 additional states (Massachusetts and South Carolina) and is formulating plans to begin expanding into Arizona by the end of the calendar year.

By 2010, HHS plans to have four permanent RACS in place. Each RAC will be responsible for identifying overpayment and underpayments in approximately one-quarter of the country.

Contracting Actions

In FY 2007, HHS began utilizing contracting actions, specifically award fee plans to create incentives for the Medicare Administrative Contractors to further reduce improper payments. For the first time HHS included a “pilot” Comprehensive Error Rate Testing Program award fee metric into the award fee plan for the Jurisdiction 3 (J3) Medicare Administrative Contractor. Under this award fee plan, the J3 contractor can earn some, all or none of the award fee pool for the Comprehensive Error Rate Testing program metric based on its FY 2008 error rate. HHS will utilize lessons learned from this pilot to help structure future contracting incentives.

Additional Activities

In FY 2007, HHS published final rules to measure error rates in Medicaid, SCHIP, and Child Care.

In FY 2007, HHS-OIG conducted a three state pilot program to review errors in its TANF basic assistance program.

In FY 2007, HHS began to implement the Medicaid Payment Error Rate Measurement program using a national contractor to determine the Medicaid FFS payment error rate based on medical reviews and data processing errors.

In FY 2007, HHS finalized a draft methodology and protocol to determine whether states accurately claim and properly allocate costs for administrating the title IV-E foster care program. Field testing of this methodology also began in FY 2007 and will continue in FY 2008.

In FY 2007, the Public Assistance Reporting Information System (PARIS) expanded its scope to include two more program matches, Child Care and Workers’ Compensation. As a result, the August 2007 data match was the largest to date, both in terms of number of States participating and number of SSNs submitted. In the fall of 2007 Ohio notified HHS of their intention to join PARIS which will bring the total number of States involved to 42, or 44 total jurisdictions, including DC and Puerto Rico.

Date of Report: November 15, 2007

Other sections of the Improper Payments Information Act Report