NCPA - National Center for Policy Analysis

Dramatic Fall In Improper Medicare Payments

February 10, 1999

The amount of improper Medicare payments to doctors, hospitals and other health care providers fell sharply last year, according to the inspector general of the Department of Health and Human Services.

  • Some $12.6 billion was erroneously paid out in 1998 -- far less than the $23.2 billion in 1996 and $20.3 billion in 1997.
  • About 7 percent of payments were deemed improper last year -- compared to 11 percent in 1997 and 14 percent in 1996.
  • Improper payments are due to inadvertent mistakes, outright fraud and abuse -- with most the result of medically unnecessary services and claims overstating the value of services actually provided.
  • Criminal prosecutions and convictions for fraud have doubled in the last four years -- with convictions reaching 326 last year, compared to 140 in 1994.

Billing for unnecessary services cost $7 billion last year. Overbilling for services amounted to $2.3 billion. Documentation errors claimed $2.1 billion of the total. Finally, goods and services not covered under Medicare made up $1.2 billion.

HHS officials attributed the decline in improper payments to greater caution among health care providers in submitting claims.

Source: Robert Pear, "Improper Medicare Payments Fall but Still Cost $12.6 Billion," New York Times, February 10, 1999.


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