Medicare Error and Denial Rates

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Medicare Error and Denial Rates

• Susan Sprau, MD, FACP
• April 16, 2005

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Medicare Billings are on Rise

• Medicare payments to physicians grew 15 from
  2003 to 2004.
• Monthly beneficiary premiums could increase by
  11 to 89.20 next year.
• Surge in costs appears to be driven by more
  intensive tests and treatments provided to
  chronically ill patients in doctors' offices
  some of which appear to offer little or no
  medical benefit.
• M. McClellan, M.D., CMS

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CERT

• Comprehensive Error Rate Testing Program
• Introduced in 2003 by CMS
• Designed to detect errors made by Medicare
  carriers in payments to providers

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Medicare Error Rates 2003-2004

• Year Total Over Under
  Gross
• Payment Payment Payment
  Error
• 2003 199.1 B 20.5 B 0.9 B
  10.8
• 2004 213.5 B 20.8 B 0.9 B
  10.1
• Goal for 2004 was 5.6 gross errors.
• Goal for 2008 is 4.7 gross errors.

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FY 2004 Net Errors as a Percentage of Total
Dollar Amount Sampled
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CERT Errors by Specialty

• Internists 26.38
• General Physicians 22.12
• Urologists 21.34
• Family Practice 19.92

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Medicare Denials

• CERT program does not track provider services
  denied by Medicare carriers.
• Carriers are not required to publish statistics
  on denials.
• Denials would be expected to increase as CMS
  focuses on carrier error rates.

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Why Do Medicare Denials Matter?

• Denials
• Increase practice overhead and thereby reduce
  net revenues for work performed
• Result in increased work for Medicare carriers
• Reduce total Medicare expenditures
• May contribute to increased audits

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Medicare Denials for Internal Medicine
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Medicare Denials by Specialty 2003-2004

• Cardiology 10.0
• Family Practice 10.8
• General Surgery  16.0
• Internal Medicine 19.1
• Psychiatry 11.4

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Pennsylvania Denials

• Denials increase from 2003-2004 was due to 2 J
  codes for anti-hemophilic factor
• Other top codes denied were
• 99232 Subsequent hospital care
• 99213 Office/outpt follow-up
• 99214 Office/outpt follow-up
• 93010 EKG interpretation
• 99231 Subsequent hospital care

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Dollars and Cents

• Average internist
• charges are 46 Medicare/Medicaid
• net income 150,000./yr
• overhead 58 gross revenues
• 10 Medicare denial rate 16,400.
• 19 Medicare denial rate 31,200.
• SGR 5 decrease 2006 8,200.

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Denial Patterns

• Individual physicians have reported denials
  for
• EKG
• Cholesterol testing
• Home health oversight
• Prolonged attention
• The appeals process is burdensome and often the
  costs are greater than amount appealed.

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Costs to Appeal a Denial

• Avg. internist reimbursement/ office visit 68.
• Staff/overhead cost to send appeal letter 12.
• First level appeal often denied (Calif.)
• Incorrect phone responses from Medicare carrier
  30.

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Top 10 Billing Errors

• Duplicates
  399,518.
• Bundled Services
  90,024.
• Medical Necessity
  72,704.
• Beneficiary Eligibility
  68,587.
• Medicare Secondary Payer (MSP)
  36,285.
• Non-covered services
  35,762.
• Provider Number Missing
  27,366.
• Unique Provider Identification Number (UPIN)
  24,467.
• CLIA
  22,623.
• Screening
  21,402.

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Top 5 Denial Reasons for Wisconsin, 1/04-3/04

• 1. Independent Lab Billing EKG tracing or
  Specimen Procurement in Place-of-Service Patient
  Home.
• 2. Procedure code not paid separately (always
  bundled), non-covered, or not valid for Medicare
  purposes.
• 3. Facility Provider Not Billed.
• 4. Individual Provider Number Required.
• 5. Invalid Diagnosis Code.

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Conclusion

• CMSs CERT data may increase Medicare Carrier
  denials to providers.
• Internal Medicine is affected disproportionately.
• Denial data is not consistently reported.
• Collaboration between State Chapters and National
  ACP is needed.

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Future Directions

• Work with CMS and Medicare carriers to release
  denial data.
• Use this data to find patterns of errors.
• Educate our membership to reduce denial rates
• Advocate for CMS/Medicare carriers to improve the
  appeals process.

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Thanks to

• Kerry Hunt, ACP Staff
• John LaFata, M.D., CA Chap ACP HPPC
• Scott Manaker, M.D., Pennsylvania CAC rep
• Catalina Ramirez, LACMA
• Jerry Tilles, M.D., CA Chap ACP HPPC

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Internal Medicine Denials