GAO: Tighter “medically unnecessary” limits could improve Medicare savings

Less than 0.1% of payments Medicare made in 2011 were for amounts of services that exceeded unpublished CMS limits for “medically unlikely” claims that failed to include reasons to indicate why the services provided were medically necessary, the General Accountability Office (GAO) found.

 

However, CMS is not evaluating local edits to determine whether lower national limits might be more appropriate, GAO says in a report released June 11. “To the extent that these and other local edits are not evaluated more systematically, CMS may be missing an opportunity to achieve savings,” the report notes.

 

Medically unlikely edits (MUE) are used by CMS’s Medicare administrative contractors (MACs) to compare services billed with the amount of services likely to be provided under normal medical practice to a beneficiary by the same provider on the same day – no more than one cataract operation per eye, for example.

 

In its analysis of 2011 claims data, GAO found that providers sought only some $14 million for services that exceeded unpublished MUE limits and where the claims did not include information from the providers to indicate why the additional services were medically necessary. Total payments for  the same services amounted to $23.9 billion.

 

Medicare contractors that pay claims have permission to develop local edits, which can set more restrictive limits for some services than the national MUE limits, the report notes. GAO's analysis of claims data showed that by applying a few of these more restrictive local limits instead of the national MUE limits, CMS could have lowered payments by an additional $7.8 million.

 

CMS and its contractors do not have a system in place for examining claims to determine the extent to which providers may be exceeding MUE limits and whether payments for such services were proper. CMS officials and contractors told GAO that they examine aberrant billing patterns at a provider level, that is, across all services billed by the provider, but not specifically for services with unpublished MUE limits.

 

GAO found that payments that exceeded MUE limits were concentrated among certain providers and for certain services. For example, the top 100 providers with payments that exceeded the MUE limits accounted for nearly 44% of total payments that exceeded the MUE limits, although they accounted for only about 1 percent of total payments for all services with unpublished MUEs. Moreover, about 26% of the top 100 providers included clinical laboratories and durable medical equipment providers, “both of which have been identified in the past as having high potential for fraudulent billings.”