Center for American Progress

RELEASE: Medicare, Medicaid Payment Reform Means Savings without Sacrificing Quality of Care
Press Release

RELEASE: Medicare, Medicaid Payment Reform Means Savings without Sacrificing Quality of Care

Washington, D.C.— Billions of taxpayer dollars per year can be saved by reforming the way Medicare and Medicaid investigate improper payments, says Marsha Simon in a new report from the Center for American Progress entitled, “Payment Police 2.0: How to Stop Paying Bad Medicare and Medicaid Claims.” Despite billions spent to properly issue funds, payment error rates were as high as 52 percent in some areas and totaled more than $72 billion in 2010.

“Medicare contractors, for example, should pay taxpayers back a portion of the claims they pay in error,” Simon says. “Just a 10 percent improvement in contractors’ performance would save $3.3 billion each year.”

At a time when Congress is considering sweeping changes to Medicare and Medicaid, a concerted effort to reduce payment errors will help reduce the deficit and improve the efficiency and accountability of these critical health care programs.

Simon’s model for reducing payment errors to contractors is modeled after an existing program already in place at the Department of Defense. Despite the complexity of the Medicare and Medicaid systems, the Department of Defense program proves that it is possible to achieve significant savings by reducing medical payment fraud.

Among the recommendations in the paper to streamline the payment process and ensure quality of care for patients are:

  • Eliminating conflicts of interest between contractors who enroll providers, pay their Medicare claims, review the claims for errors, and handle appeals of those decisions
  • Developing an evidence-based system to determine which approaches to reducing payment error are most successful and implement those methods.
  • Investing in integrated, comprehensive databases for tracking medical claims.
  • And targeting payment review efforts on high-cost providers and medical services such as advanced imaging and patients enrolled in both Medicare and Medicaid

Combating improper payments and health care fraud makes good fiscal and political sense. It is important, however, that the right tools be assembled to tackle this task, as Simon’s paper argues forcefully. Outdated, incomplete, and competing databases are a serious problem in identifying systemic medical claims payment error and fraud. To achieve real cost savings, the structural shortcomings of the claims payment system must be addressed.

To read the full report, click here.