Improper Payment Reduction Outlook Notes

(1) HHS is in the process of developing a Medicare Advantage (Part C) error rate. In FY 2007, HHS prepared a Part C Risk Assessment and identified the payment system calculation as one risk susceptible area. HHS has provided an initial estimate of the Payment System Calculation Discrepancies (PSCD) for FY 2007 Medicare Advantage prospective payments from January-June 2007. The PSCD Estimate is a measure of the accuracy of the payment system calculations of the prospective capitation payments. These discrepancies are not payment errors because a payment error would only occur after final reconciliation amounts have been determined for a given plan year. The PSCD Estimate is not based on final payments and is not a comprehensive measurement of the Part C payment error rate. HHS calculated a Medicare Advantage PSCD Estimate of 0.642 percent for payment made January- June 2007 and the PSCD gross amount for January – June 2007 totaled $234,267,567.

(2) HHS is in the process of developing a Medicare Prescription Drug (Part D) error rate. In FY 2007, HHS prepared a Part D Risk Assessment and identified the payment system calculation as one risk susceptible area. HHS has provided an initial estimate of the Payment System Calculation Discrepancies (PSCD) for FY 2007 Prescription Drug prospective payments from January-June 2007. The PSCD Estimate is a measure of the accuracy of the payment system calculations of the prospective capitation payments. These discrepancies are not payment errors because a payment error would only occur after final reconciliation amounts have been determined for a given plan year. The PSCD Estimate is not based on final payments and is not a comprehensive measurement of the Part D payment error rate. HHS calculated a Part D PSCD Estimate of 0.020 percent for payment made January- June 2007 and the PSCD gross amount for January – June 2007 totaled $4,102,667.

(3) This preliminary error rate is from 17 States for 6 months only and was calculated in September 2007. CMS is completing the remaining 6 months and will report an annual 2006 Medicaid fee-for-service error rate in the 2008 PAR. This preliminary error rate does not reflect the late implementation of policies in the measurement cycle. These factors should be considered when reviewing the preliminary rate and may impact the final calculation of the annual error rate.

(4) HHS OIG conducted a pilot review of TANF cash assistance payments in three states. The error rates for the pilots ranged from 11.5 percent to 40 percent. Documentation errors comprised at least 22 percent of each of the error rates.

(5) In FY 2007, the Child Care program completed pilot projects measuring improper payments based on state eligibility criteria. The payment error rates for these pilots ranged from 2 percent to 18 percent based on a 90 percent confidence level.

Report Date: November 15, 2007

Improper Payment Reduction Outlook Notes

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