Lack of Documentation is a $23 Billion Overpayment Problem for Medicare

Medicare overpayment is a massive problem, and lack of documentation is a significant contributor.

When we see errors adding up to billions of dollars in improper payments, we pay attention. As payment integrity technology experts and also healthcare consumers we take notice when Medicare fee-for-service programs get slammed for $23 billion in improper payments due to documentation errors. More jaw dropping? Poor documentation processes cause 64% of improper payments in Medicare.

Let’s take a deeper look at how the problem of insufficient documentation became so huge and what you can reasonably do to address documentation errors at your health plan.We have considerable experience on the provider side of healthcare, and our interest in payment integrity is hyper-focused on automating some of the documentation processes required by the federal government.

Just How Big of a Problem are Medicare Overpayments?

When we discuss Medicare overpayment issues, it’s usually a million+ or billion-dollar problem. Recent headlines point to this fact:

CMS may overpay Medicare Advantage plans by billions, study finds

SUTTER HEALTH, AFFILIATES TO PAY BACK $30M FOR MEDICARE ADVANTAGE OVERPAYMENTS

$50 billion in Medicare waste? Yes, that’s how much in ‘improper payments’ are made per year

We’ve spent a considerable amount of time on our blog discussing fraud, waste and abuse and the role these elements play in improper payments. The problem is complex, and the solutions have to be agile and at-the-ready in order to be effective. According to Seto Bagdoyan, a director of audit services at the Government Accountability Office (GAO), of the “billion dollar a week” waste figures cited for 2017, $45 billion can be attributed to overpayments.

Some experts counter that the way HHS calculates waste is “weak,” and Medicare may actually have a larger problem than the already outsized figures making headlines. It’s hard to fathom the depths that Medicare waste truly runs, but being the problem solvers we are, we urge you to look at one sizable chunk of the problem: Improper Documentation.

What is “Poor Documentation” and What Causes It?

If you can’t easily see the patient’s medical “story,” you’re likely looking at insufficient documentation.

Poor documentation has devastating impacts on patient care and is also a large driver of the improper payment problem. Health leaders attribute poor documentation problems to:

• Busy Providers
• Lack of specificity
• Need for documentation education
• Diluted content from “copy and paste” methodologies

CMS indicates that documentation needs to occur during or quickly following a patient visit and should follow the principles outlined in this document (which includes stating the rationale behind ancillary services or documenting in a way that makes the reason easily inferred).

“In fiscal year 2017, insufficient documentation comprised the majority of estimated FFS improper payments in Medicare and Medicaid, with 64 percent of Medicare and 57 percent of Medicaid improper payments due to insufficient documentation.” (source)

Most Overpayments Stem from Documentation Errors

Recently, the GAO reported in detail that overpayments in Medicare and Medicaid are mostly due to “insufficient documentation.” GAO figures the amount to be $23.2 billion for Medicare alone and $4.3 billion for Medicaid. CERT review criteria changed in 2009 and was attributed as a primary cause for discrepancies between FFS programs; Medicaid’s rate of insufficient documentation is only 1.3% while Medicare is over 6% on all claims.

The way medical reviews have been conducted is now being questioned, with the GAO citing the following four areas of difference:

1. Face-to-face examinations
2. Prior authorizations
3. Signature requirements
4. Documentation from referring physicians for referred services

The truth is, poor documentation is a problem we saw coming. We know that providers are busy, that their primary focus is serving patient needs, and that most EHR “solutions” are just more manual obligations for busy medical staff. Across the board, the ability to connect data between disparate systems is one that our industry has struggled to solve. That’s what makes Pareo® so unique. And with administrative complexity only growing, we’ve worked up a solution.

Pareo® Clinical: Our Hyper-focused Solution

Pareo® Clinical is the answer to streamlined workflows, a full document repository to support the audit findings, and the ability to develop more robust analytics that can be implemented earlier in your processes to catch documentation deficiencies before the payment goes out the door.

And if under-documentation is an ongoing problem with certain providers, Pareo® Provider can open up the lines of communication between payer and provider and offer education to mitigate that issue in the future. Providers want to submit clean claims, after all.