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SECTION III: OTHER INFORMATION (Section 1-10)

Topics In This Section: Other Financial Information | Improper Payments Information Act Report (Section 1-10 | 11 | 12-15) | Summary of Financial Statement Audit | Summary of Management Assurances | FY 2015 Top Management and Performance Challenges Identified by the Office of Inspector General (OIG)

Improper Payments Information Act Report

1.0 Overview

The United States Department of Health and Human Services (HHS or the Department) FY 2015 Improper Payments Information Act Report includes a discussion of the following information, as required by the Improper Payments Information Act of 2002 (IPIA), as amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA) and the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA); OMB Circular A-136; and Appendix C of OMB Circular A-123:

1.10 Program Descriptions

The following is a brief description of the risk-susceptible programs discussed in this report.

OMB-Determined Risk-Susceptible Programs:

  • Medicare FFS - A federal health insurance program for people age 65 or older, people younger than age 65 with certain disabilities, and people of all ages with End-Stage Renal Disease.
  • Medicare Part C - A federal health insurance program that allows beneficiaries to receive their Medicare benefits through a private health plan.
  • Medicare Part D - A federal prescription drug benefit program for Medicare beneficiaries.
  • Medicaid - A joint federal/state program, administered by the states, that provides health insurance to certain low income individuals.
  • CHIP - A joint federal/state program, administered by the states, that provides health insurance for qualifying children.
  • TANF - A joint federal/state program, administered by the states, that provides time-limited cash assistance as well as job preparation, work support, and other services to needy families with children to promote work, responsibility, and self-sufficiency.
  • Foster Care - A joint federal/state program, administered by the states, for children who need placement outside their homes in a foster family home or a child care facility.
  • CCDF - A joint federal/state program, administered by the states, that provides child care financial assistance to low income working families.

Superstorm Sandy Risk-Susceptible Programs:

  • Head Start -A federal program that provides comprehensive developmental services for America’s low-income children from birth to five years of age, and their families.
  • SSBG - A joint federal/state program, administered by the states, which supports programs that allow communities to achieve or maintain economic self-sufficiency to prevent, reduce or eliminate dependency on social services.
  • FVPS Act - A federal funding stream dedicated to the prevention of domestic violence as well as support of emergency shelters and related assistance for victims of domestic violence and their children.
  • ASPR Research - A federal initiative to build a strong scientific research dataset and to support research that will aid in the response to, and recovery from, Superstorm Sandy.
  • CDC Research -A federal efforttoimprove and enhance the emergency preparedness system to protect life and property from disasters.
  • SAMHSA -A joint federal/state initiative to provide continued and enhanced mental health and substance abuse treatment to affected parties.
  • NIH Research -A federal initiativeto restore investment in biomedical research and infrastructure that was severely damaged or destroyed by Superstorm Sandy.

2.0 Risk Assessments

In addition to the programs deemed by OMB to be susceptible to significant improper payments and those required to be measured under the Superstorm Sandy Disaster Relief Appropriations Act of 2003 (Disaster Relief Act), HHS also reviews other programs to determine if they are susceptible to significant improper payments. From FY 2012 through FY 2014, HHS’s risk assessment approach to meet the improper payment risk assessment requirements under IPERIA, and OMB Circular A-123, Appendix C, was part of a larger, agency-wide program integrity process. In late FY 2015, HHS incorporated the improper payment risk assessment requirements into a new, qualitative risk assessment tool. As a result, for FY 2015, HHS conducted risk assessments under both approaches.

Per OMB Circular A-123, Appendix C, Part I.A.9.b, the new risk assessment tool—or questionnaire—contains nine factors that shall be taken into account during a risk assessment, including:

  • Whether the program reviewed is new to the agency;
  • The complexity of the program reviewed, particularly with respect to determining correct payment amounts;
  • The volume of payments made annually;
  • Whether payments or payment eligibility decisions are made outside of the agency, for example, by a state or local government, or a regional federal office;
  • Recent major changes in program funding, authorities, practices, or procedures;
  • The level, experience, and quality of training for personnel responsible for making program eligibility determinations or certifying that payments are accurate;
  • Inherent risks of improper payments due to the nature of agency programs or operations;
  • Significant deficiencies in the audit reports of the agency including, but not limited to, HHS Inspector General or Government Accountability Office (GAO) audit report findings, or other relevant management findings that might hinder accurate payment certification; and
  • Results from prior improper payment work.

In addition to these risk factors, the improper payment risk assessment questionnaire includes information on specific risks identified by the program that may lead to improper payments, as well as controls that may help mitigate those risks. By examining both the required risk factors and additional internal control information, the new risk assessment tool provides a comprehensive review and analysis of selected programs’ operations to determine if a risk exists and the nature and extent of the risks identified.

In FY 2015, HHS reviewed three programs under the previous integrated risk assessment approach: Administration for Community Living (ACL) State Plan Development for Mandatory Grant Programs; Indian Health Service (IHS) Special Diabetes Initiative; and the National Partnership for Action to End Health Disparities. HHS also reviewed nine programs under the new risk assessment approach: Adoption Assistance; Nutrition Services; Health Costs, Quality, and Outcomes; National Breast and Cervical Cancer Early Detection; Food and Drug Administration (FDA) Grants; Ryan White HIV/AIDS Part B; IHS Interagency Agreements; Internal and National Emergency Ebola Response and Preparedness; and Access to Recovery Grants. HHS determined that all of the programs reviewed under the two risk assessment approaches were not at-risk for significant improper payments. The Centers for Medicare & Medicaid Services (CMS) did not complete an improper payment risk assessment in FY 2015, but has instead begun working on a comprehensive improper payment risk assessment to evaluate health insurance marketplace and related programs created under the Patient Protection and Affordable Care Act (see Section 2.10 for moreinformation on the Affordable Care Act risk assessment).

HHS also reviewed OMB guidance and departmental activities related to the oversight of employee pay and charge cards to determine if existing activities could be leveraged to meet IPERIA’s requirement to assess the risk in these two payment categories. After determining that some of these processes could be leveraged—particularly for employee pay—HHS began planning to conduct qualitative risk assessments of employee pay and charge cards at the Program Support Center (PSC) and the following Operating Divisions (OpDivs): FDA, IHS, NIH, and the CDC/Agency for Toxic Substances and Disease Registry (ATSDR) in FY 2016. HHS will review these OpDivs because they comprise the vast majority of charge card program expenses and cardholders. HHS will report the risk susceptibility for improper payments related to employee pay and charge cards in the FY 2016 Agency Financial Report (AFR).

2.10 Affordable Care Act Risk Assessment

The Department of Health and Human Services (HHS) and the Department of the Treasury each have responsibilities for ensuring payment accuracy in programs created under the Affordable Care Act. Performing comprehensive risk assessments is critical to establishing an effective program for achieving payment accuracy in future years. In FY 2015, both Departments finalized plans for and began to perform comprehensive improper payment risk assessments to determine areas that might affect Advance Premium Tax Credit (APTC), Premium Tax Credit (PTC), Cost-sharing Reduction and Basic Health Plan payment accuracy. Both Departments are leveraging the same Federally Funded Research and Development Center (FFRDC) to assist with conducting these risk assessments, which will facilitate interagency coordination and provide a comprehensive assessment of risk that takes into account activities by the Marketplaces, HHS, and the Internal Revenue Service. An update on the status and preliminary results of the FFRDC supported risk assessments will be reported in the FY 2016 AFR. In addition, both Departments have established internal controls to provide for effective program operations, reliable financial reporting, and compliance with laws and regulations

3.0 Statistical Sampling Process

Each program’s statistical sampling process is discussed in Section 11.0: Program-Specific Reporting Information or Section 15.0: Superstorm Sandy Reporting Information. Unless otherwise stated in Section 11.0 or Section 15.0, all programs that reported an error rate estimate complied with the requirement that all estimates be based on the equivalent of a statistically valid random sample of sufficient size to yield an estimate with a 90 percent confidence interval of plus or minus 2.5percentage points around the estimate of the percentage of erroneous payments. In addition, seven of the eight programs that OMB determined are susceptible to significant improper payments are reporting error estimates calculated by a statistical contractor.

3.10 Error Rate Presentation

OMB Circular A-136 allows agencies to report net error rates in addition to the required gross error rates. Table 1 in Section 9.0: Improper Payment Reduction Outlook presents each at-risk program’s gross and net error rates. In addition, Table 8 in Section 15.0: Superstorm Sandy Reporting Information presents gross and net error rates for each of the Divisions that received Superstorm Sandy funding.

The gross error rate is the official program error rate; it is calculated by adding the sample’s overpayments and underpayments and dividing by the total dollar value of the sample. The net error rate reflects the overall estimated monetary loss to the program; it is calculated by subtracting the sample’s underpayments from overpayments and dividing by the total dollar value of the sample.

4.0 Corrective Action Plans

Each program’s CAP for reducing the estimated rate of improper payments can be found in Section 11.0: Program-Specific Reporting Information or Section 15.0: Superstorm Sandy Reporting Information. CAPs are used to set aggressive, realistic targets and outline a timetable to achieve scheduled targets. OMB approves all out-year error rate targets. The Department reviews CAPsannually to ensure plans focus on the root causes of the errors, thus making it more likely that targets are met. If targets are not met, HHS will develop new strategies, adjust staffing and other resources, and possibly revise targets.

4.10 Corrective Actions for High-Priority Programs

Under Executive Order (EO) 13520 and its implementing guidance, OMB identifies programs that have more than $750 million in annual estimated improper payments and that contribute substantially to the government-wide improper payment estimate. These programs, known as high-priority programs, are required to perform certain activities, including: selecting Accountable Officials to oversee the agency’s improper payment efforts; posting improper payment information to PaymentAccuracy.gov; and developing supplemental measures in addition to the annual error rate measures.

HHS has five programs that OMB deemed high-priority programs: Medicare FFS, Medicare Part C, Medicare Part D, Medicaid, and CHIP. Accordingly, HHS has worked to meet the EO’s additional requirements for its high-risk programs, and information on HHS’s efforts can be found on PaymentAccuracy.gov. In addition, while root causes of errors in the Department’s programs can fluctuate from year to year, HHS remains focused on reducing the annual error rates for its high-priority programs, and is taking many actions to prevent and reduce improper payments (see Section 11.0 for more information on HHS’s corrective actions).

5.0 Accountability in Reducing and Recovering Improper Payments

Strengthening program integrity throughout the organization is a top Departmental priority, extending to HHS senior executives and program officials at each of our agencies and programs. As evidence of this focus, beginning with senior leadership and cascading down, performance plans contain strategic goals that are related to strengthening program integrity, protecting taxpayer resources, and reducing improper payments. Senior Executives and programs officials are evaluated as part of their semi-annual and annual performance evaluations on their progress toward achieving these goals.

6.0 Information Systems and Other Infrastructure

Section 11.0: Program-Specific Reporting Information details each program’s information systems and other infrastructure.

7.0 Mitigation Efforts Related to Statutory or Regulatory Barriers

Section 11.0: Program-Specific Reporting Information reports each program’s statutory or regulatory barriers, if any, to reduce improper payments.

8.0 Progress and Achievements

8.10 FY 2015 Progress

As of FY 2013, OMB no longer requires Head Start to report annual improper payment estimates, due to the strong internal controls, monitoring systems, and low reported error rates from FY 2009 through FY 2012 for the program. In lieu of an annual error rate measurement, HHS provides oversight through Head Start’s existing internal controls and monitoring systems, and annually reports to OMB on its internal controls. For FY 2015, HHS continued to enhance onsite monitoring, mandatory annual visits, and the oversight activities of the Monitoring Disallowance Review Board. In addition, 45 Code of Federal Regulations (CFR) 1305 went into effect in March 2015 and requires more detail and accountability of eligibility practices. Overall, FY 2015 onsite monitoring results indicate the number of grantees with erroneous payments related to eligibility remained consistently low, even with an increase in the number of in-depth reviews to determine noncompliance with eligibility regulations.

8.20 FY 2015 Achievements

8.21 Improving Program Integrity in Medicare and Medicaid

In FY 2015, HHS strengthened its efforts to reduce and recover improper payments in Medicare and Medicaid. While a few of these efforts are highlighted below, more detailed information on the FY 2015 Medicare and Medicaid programs’ performance and corrective actions can be found in Section 11.0: Program-Specific Reporting Information.

CMS Program Integrity Board

As part of HHS’s efforts to reduce improper payments, CMS established an agency-wide Program Integrity Board (the Board) to identify and prioritize improper, wasteful, abusive, and potentially fraudulent payment vulnerabilities in its programs. The Board is comprised of CMS executive leaders, all of whom share the mutual objective to identify and prevent improper and fraudulent payments. After identifying high-priority vulnerabilities, the Board directs corrective actions and tracks issues to resolution.

Affordable Care Act Provider Enrollment Moratorium

Section 6401 of the Affordable Care Act added new Section 1866(j)(7) to the Social Security Act, which provides HHS with the authority to impose a moratorium on the enrollment of new providers and suppliers to prevent or combat fraud, waste, or abuse in Medicare, Medicaid, or CHIP. On July 30, 2013, HHS launched the first temporary (six month)enrollment moratorium under the Affordable Care Act for Miami-area and Chicago-area home health agencies (HHAs) and ground ambulance suppliers in the Houston-area. On January 30, 2014, HHS extended the original moratoria for these locations and expanded the enrollment moratoria to include HHAs in the Ft. Lauderdale, Detroit, Dallas, and Houston areas. HHS also expanded the moratoria for ground ambulance suppliers into the Philadelphia area. Since that expansion, the moratoria have been extended three times in six-month increments for all areas, with the most recent moratoria extension effective July 29, 2015. The focus of these efforts is to prevent and deter fraud, waste, and abuse in high-risk services and areas across the country while ensuring beneficiary access to care.

Fraud Prevention System

HHS launched the Fraud Prevention System (FPS) on June 30, 2011, as required by the Small Business Jobs Act of 2010 (SBJA). The FPS analyzes all Medicare FFS claims prior to payment using risk-based algorithms developed by HHS and the private sector. HHS uses the FPS to target investigative resources, generating alerts for suspect claims or providers in priority order, to further investigate the most egregious, suspect, or aberrant activity. HHS and its program integrity contractors use the FPS information to stop, prevent, and identify improper payments using a variety of administrative tools and actions, including claim denials, payment suspensions, revocation of Medicare billing privileges, and referrals to law enforcement.

During the third implementation year of the FPS, defined in the SBJA as January 1, 2014 through December 31, 2014, HHS took administrative action against 1,093 providers resulting in an estimated $454.0 million in identified savings. These savings were 80 percent higher than the savings from the previous implementation year, with a nearly 10 to 1 return on investment. The FPS also generated leads for 276 new investigations, and augmented information for 336 ongoing investigations. Information on these and other actions initiated through the FPS can be found in the FPS Reports to Congress.

National Benefit Integrity Medicare Drug Integrity Contractor

The National Benefit Integrity (NBI) Medicare Drug Integrity Contractor (MEDIC) performs data analysis to proactively fight fraud, waste, and abuse in the Medicare Part C and D programs. The NBI MEDIC identifies improper payments as a result of data analysis and assists HHS with recovering the improper payments. NBI MEDIC referrals to law enforcement have resulted in sentences ordering restitution of $41.4 million, forfeitures of $13.6 million, and $12.2 million in civil settlements according to FY 2015 notifications from law enforcement. As a result of the NBI MEDIC’s data analysis projects, HHS recovered $23.54 million in FY 2015 from Part D sponsors.

Medicaid Integrity Program

Under the authority of Section 1936 of the Social Security Act, as amended by the Deficit Reduction Act of 2005 (DRA), HHS’s Medicaid Integrity Program has two broad responsibilities:

  • To hire contractors to review Medicaid provider activities, audit claims, identify overpayments, and educate providers and others on Medicaid program integrity issues.
  • To provide effective support and assistance to states in their efforts to combat Medicaid provider fraud, waste, and abuse.

HHS analyzed Medicaid recoveries, which show there has been a strong focus on Medicaid integrity since the enactment of the DRA. For example, the Medicaid Integrity Program has provided the assistance of federal staff specializing in program integrity and contractor support to bolster state activities. Based on states’ quarterly reports to HHS, this assistance resulted in $656.89 million in total collections in FY 2015. The DRA also required HHS to establish a Comprehensive Medicaid Integrity Plan to guide the Medicaid Integrity Program’s development and operations. HHS's most recent Comprehensive Medicaid Integrity Plan for FYs 2014 to 2018 is available on CMS's website.

8.22 Public Assistance Reporting Information System

The Public Assistance Reporting Information System (PARIS) is a federal/state partnership with all 50 states, the District of Columbia, and Puerto Rico that provides state public assistance agencies detailed information and data to maintain program integrity and detect and deter improper payments in TANF, Medicaid, Workers’ Compensation, Child Care, and Supplemental Nutrition Assistance Program (SNAP).

HHS, the Department of Veterans Affairs (VA), and the Department of Defense (DOD) partnered to advance the PARIS project at no cost to states. The DOD’s Defense Manpower Data Center (DMDC) provides computer resources to produce a match file, using Social Security numbers submitted by the states, VA, and DOD as the key match indicator. States verify the matched individual’s eligibility and take any necessary action. HHS contributes to this effort by executing Computer Matching Agreements and coordinating the quarterly matches. Since its establishment, PARIS has strengthened program administration among its programs and state public assistance agencies. For instance, two states reported that PARIS led to reported savings or cost avoidance of approximately $99.3 million in FY 2015 alone. More information on this effective partnership can be found on ACF's website.

9.0 Improper Payment Reduction Outlook FY 2014 through FY 2018

The following tables (Table 1A, Table 1B, and Table 1C) display HHS’s improper payment results for the current year (CY) FY 2015, the prior year (PY) FY 2014, and targets for FYs 2016 through 2018. The tables include the following information by year and program, as applicable: FY outlays, the error rate or future reduction target (IP%), and dollars paid or projected to be paid improperly (IP$). In addition, for the CY, HHS included: the amount of overpayments (CY Overpayments), the amount of underpayments (CY Underpayments), and the net error rate (CY Net IP%) and the corresponding overpayments (CY net IP$), when available.

Table 1A includes improper payment information for HHS’s OMB-determined risk-susceptible programs. Table 1B includes the FY 2015 improper payment results for the programs that received Disaster Relief Act funding and does not include out-year reduction targets for programs where all of the funds have been expended. Table 1C presents the Department’s aggregate improper payment information.

Table 1A
Improper Payment Reporting for OMB-Determined Risk-Susceptible Programs
FY 2014 - FY 2018 (in Millions)

Program or Activity

PY Outlays $

PY IP %

PY IP $

CY Outlays $

CY IP %

CY IP $

CY Over payment $

CY Under payment $

CY Net IP %

CY Ne IP $

Medicare FFS

360,173
Note (a)

12.7

45,754

358,348.60
Note (b)

12.09
Note (1)

43,325.61

42,068.35

1,257.26

11.39

40,811.09

Medicare Part C

135,513
Note (d)

9.0

12,229

148,593.71 Note (e)

9.50

14,117.00

10,265.04

3,851.96

4.32

6,413.08

Medicare Part D

58,493
Note (g)

3.3

1,931

62,003.91 Note (h)

3.60

2,234.25

1,825.75

408.50

2.29

1,417.25

Medicaid

261,613
Note (j)

6.7

17,492

297,672.02
Note (k)

9.78
Note (3)

29,124.61

28,627.51

497.10

9.45

28,130.41

CHIP

9,469
Note (l)

6.5

612

9,293.91
Note (m)

6.80
Note (5)

632.11

626.27

5.84

6.68

620.43

TANF

16,327
Note (n)

N/A

N/A

16,215.32
Note (o)

N/A
Note (6)

N/A

N/A

N/A

N/A

N/A

Foster Care

1,198
Note (p)

5.5

66.2

841.01
Note (q)

3.65

30.68

28.20

2.48

3.06

25.72

Child Care

5,239
Note (r)

5.7

299

5,420.32
Note (s)

5.74

311.13

284.89

26.24

4.77

258.65

SUB-TOTAL
Note (t)

831,698

9.4

78,383

882,173.48

10.18

89,775.39

83,726.01

6,049.38

8.81

77,676.63

 

Program or Activity

CY+1 Est.Outlays $

CY+1 IP %

CY+1 IP $

CY+2 Est.Outlays $

CY+2 IP %

CY+2 IP $

CY+3 Est.Outlays $

CY+3 IP %

CY+3 IP $

Medicare FFS

393,521.05
Note (c)

11.50

45,254.92

414,857.11

10.40

43,145.14

436,331.52

9.40

41,015.16

Medicare Part C

204,161.00
Note (f)

9.14

18,660.32

204,215.00

8.79

17,950.50

201,568.00

8.79
Note (2)

17,717.83

Medicare Part D

96,504.00
Note (i)

3.40

3,281.14

99,806.00

3.30

3,293.60

97,389.00

3.20

3,116.45

Medicaid

336,988.39

11.53
Note (4)

38,854.76

365,842.60

10.48

38,340.30

364,453.62

7.36

26,823.79

CHIP

10,556.74

6.81
Note (4)

718.91

15,426.10

6.23

961.05

16,615.49

5.90

980.31

TANF

17,160.38

N/A

N/A

17,129.20

N/A

N/A

17,034.92

N/A

N/A

Foster Care

728.70

3.60

26.23

823.40

3.55

29.23

841.01

3.50

29.44

Child Care

5,420.26

8.50
Note (7)

460.72

5,376.50

8.50

457.00

5,360.38

8.50

455.63

SUB-TOTAL
Note (t)

1,047,880.14

10.24

107,257.00

1,106,346.71

9.42

104,176.82

1,122,559.02

8.03

90,138.61

Note: The Current Year (CY) CY+1, CY+2 and CY+3 estimated dollars paid improperly (IP$) is calculated based on the target error rate and estimated outlays for each year, respectively. However, it is important to note that the measurement periods for each program vary. Therefore, the future outlay estimates presented may not be the actual amounts against which the error rates will be applied to compute the dollars paid improperly in future years.

9.10 Accompanying Improper Payment Reporting for OMB Determined Risk-Susceptible Programs Notes

  • Medicare FFS PY outlays are from the FY 2014 Medicare FFS Improper Payments Report (based on claims from July 2012 – June 2013).
  • Medicare FFS CY outlays are from the FY 2015 Medicare FFS Improper Payments Report (based on claims from July 2013 – June 2014).
  • Medicare FFS CY+1, CY+2, CY+3 outlays are based on the FY 2016 Midsession Review (Medicare Benefit Outlays current law (CL)).
  • Medicare Part C PY outlays reflect 2012 Part C payments, as reported in the FY 2014 Medicare Part C Payment Error Final Report.
  • Medicare Part C CY outlays reflect 2013 Part C payments, as reported in the FY 2015 Medicare Part C Payment Error Final Report.
  • Medicare Part C CY+1, CY+2, CY+3 outlays are based on the FY 2016 Midsession Review (Medicare Benefit Outlays (CL)).
  • Medicare Part D PY outlays reflect 2012 Part D payments, as reported in the FY 2014 Medicare Part D Payment Error Final Report.
  • Medicare Part D CY outlays reflect 2013 Part D payments, as reported in the FY 2015 Medicare Part D Payment Error Final Report.
  • Medicare Part D CY+1, CY+2, CY+3 outlays are based on the FY 2016 Midsession Review (Medicare Benefit Outlays (CL)).
  • Medicaid PY outlays (based on FY 2013 expenditures) are from the FY 2015 Midsession Review and exclude CDC Vaccine for Children program funding.
  • Medicaid CY (based on FY 2014 expenditures) and CY+1, CY+2, CY+3 outlays (Medicaid - Outlays (CL) exclude CDC Vaccine for Children program funding), are from the FY 2016 Midsession Review.
  • CHIP PY outlays (based on FY 2013 expenditures) are from the FY 2015 Midsession Review.
  • CHIP CY (based on FY 2014 expenditures) and CY+1, CY+2, CY+3 outlays (CHIP Total Benefit Outlays with Children’s Health Insurance Program Reauthorization Act (CHIPRA) Bonus and Health Care Quality Provisions (CL)), are from the FY 2016 Midsession Review.
  • TANF PY outlays amount is based on the FY 2015 Midsession Review.
  • TANF CY, and CY+1, CY+2, CY+3 outlays are based on the FY 2016 Midsession Review (TANF total outlays including the Healthy Marriage Promotion and Responsible Fatherhood Grants programs, and excluding the TANF Contingency Fund).
  • Foster Care PY outlays are based on the FY 2015 Midsession Review, and reflect the federal share of maintenance payments.
  • Foster Care CY, and CY+1, CY+2, CY+3 outlays are based on the FY 2016 Midsession Review, and reflect the federal share of maintenance payments.
  • Child Care PY outlays are based on the FY 2015 Midsession Review.
  • Child Care CY, and CY+1, CY +2, CY+3 outlays are based on the FY 2016 Midsession Review.
  • The “Total” does not represent a true statistical estimate for the agency, and does not include information for TANF.
  • Beginning in FY 2012, in consultation with OMB, HHS refined the improper payment methodology to account for the impact of rebilling denied Part A inpatient hospital claims for allowable Part B services when a Part A inpatient hospital claim is denied because the services (i.e., improper payments due to inpatient status reviews) should have been provided as outpatient services. HHS continued this methodology in FY 2013 and FY 2014. This approach is consistent with: (1) Administrative Law Judge (ALJ) and Departmental Appeals Board (DAB) decisions that directed HHS to pay hospitals under Part B for all of the services provided if the Part A inpatient claim was denied, and (2) recent Medicare policy changes that allow rebilling of denied Part A claims under Part B.

HHS calculated an adjustment factor based on a statistical subset of inpatient claims that were in error because the services should have been provided as outpatient. This adjustment factor reflects the difference between what was paid for the inpatient hospital claims under Medicare Part A and what would have been paid had the hospital claim been properly submitted as an outpatient claim under Medicare Part B. Application of the adjustment factor decreased the overall improper payment rate by 0.38 percentage points to 12.09 percent or $43.33 billion in projected improper payments. Additional information regarding the adjustment factor can be found on pages 166 – 167 of HHS’s FY 2012 AFR.

  • The Medicare Part C targets for CY+2 and CY+3 are held constant based on the uncertainty of out-year trends. The target for CY+3 will be re-evaluated after the FY 2016 reporting period.
  • HHS calculated and is reporting the national Medicaid error rate based on measurements that were conducted in FYs 2013, 2014 and 2015. The national Medicaid error component rates are: Medicaid FFS: 10.59 percent and Medicaid managed care: 0.12 percent. The Medicaid eligibility component improper payment rate is held constant at the FY 2014 reported rate of 3.11 percent as described in Section 11.40 below.
  • The Medicaid and CHIP CY+1 IP% reduction target increasedfrom the CY IP%. As described in Section 11.41, although all states are included in the improper payment rates, HHS only reviews 17 states each year. In FY 2014, HHS reported a rate reflecting the first 17 states measured under new requirements, which are described in Section 11.42 and 11.52 as drivers of the Medicaid and CHIP improper payment rates. The FY 2015 improper payment rates reflect the second group of 17 states subject to new requirements for a total of 34 states. In FY 2016, HHS will report a rate that reflects the measurement of the final group of 17 states subject to new requirements, and will be the first baseline improper payment rate reflecting measurement of all states under the new requirements. HHS expects to see a decrease in the following years due to corrective actions as states are measured again.
  • HHS calculated and is reporting the national CHIP error rate based on measurements that were conducted in FYs 2013, 2014, and 2015. The national CHIP error component rates are: CHIP FFS: 7.33 percent and CHIP managed care: 0.37 percent. The CHIP eligibility component improper payment rate is held constant at the FY 2014 reported rate of 4.22 percent as described in Section 11.50 below.
  • The TANF program is not reporting an error rate for FY2015. Statutory limitations prohibit HHS from requiring states to participate in a TANF improper payment measurement. Please see Section 11.60 for additional information on statutory limitations to establishing a TANF improper payment measurement.
  • The Child Care and Development Block Grant Act of 2014 (CCDBG) reauthorized the Child Care and Development Fund program for the first time since 1996. HHS measures one-third of the Child Care grantees each year. HHS established a slight increase in the improper payment target rates to accommodate all reporting cohorts’ implementation of the sweeping policy and procedure changes under the new CCDBG statute. As each reporting cohort completes reviews in the next three years, HHS anticipates that error rates will increase as new policies are implemented and reviewed. Future targets may be adjusted as well, depending on future performance.

Table 1B
Improper Payment Reporting for Superstorm Sandy Programs
FY 2014 - FY 2018 (in Millions)

Program or OpDiv

PY Outlays $

PY IP %

PY IP $

CY Outlays $

CY IP %

CY IP $

CY Over payment $

CY Under payment $

CY Net IP %

CY Net IP $

ACF Head Start

3.93

0

0

16.38

0.38

0.0616

0.0616

0

0.38

0.0616

ACF Social Services Block Grant

67.03

13.5

9.04

209.14

0.22
Note (8)

0.464

0.458

0.006

0.22

0.452

ACF Family Violence Prevention and Services

0.14

4.4

0.006

0.893

0.89

0.00794

0.00794

0

0.89

0.00794

ASPR Research

0
Note (9)

0

0

1.55

0

0

0

0

0

0

CDC Research

1.82

0

0

4.6

0

0

0

0

0

0

SAMHSA

0.42

12.7

0.05

1.32

1.38

0.0182

0.0101

0.0081

0.15

0.002

NIH Research

32.05

0.002

.000741

38.60

2.29

0.885

0.885

0

2.29

0.885

Sub-Total Note (12)

105.39

8.63

9.10

272.483

0.53

1.437

1.423

0.014

0.517

1.409

 

Program or OpDiv

CY+1 Est. Outlays $

CY+1 IP %

CY+1 IP $

CY+2 Est. Outlays $

CY+2 IP %

CY+2 IP $

CY+3 Est. Outlays $

CY+3 IP %

CY+3 IP $

ACF Head Start

49.02

0.34

0.167

25.26

0.30

0.076

N/A

N/A

N/A

ACF Social Services Block Grant

79.55

0.21

0.17

79.55

0.20

0.16

N/A

N/A

N/A

ACF Family Violence Prevention and Services

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

ASPR Research

3.055

0

0

N/A

N/A

N/A

N/A

N/A

N/A

CDC Research

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

SAMHSA

0.60
Note 10

1.00

0.006

N/A

N/A

N/A

N/A

N/A

N/A

NIH Research

9.73

2.29
Note 11

0.223

N/A

N/A

N/A

N/A

N/A

N/A

Sub-Total
Note (12)

141.955

0.40

0.566

104.81

0.23

0.24

N/A

N/A

N/A

9.20 Accompanying Improper Payment Reporting for Superstorm Sandy Programs Notes

  • ACF SSBG’s FY 2014 reviews consisted only of a case record review in New Jersey. For the FY 2015 review period, HHS completed case record and vendor payment reviews for Connecticut, New York, and New Jersey. In FY 2015, the case record component error rate was 1.18 percent, and the vendor payment error rate was 0.18 percent. Additional information on the error rate for the case record reviews and vendor payments—both of which comprise the national error rate – can be found in Section 15.20.
  • ASPR Research’s FY 2014 and FY 2015 measurement period was based on the previous FY. ASPR Research reported $0 in PY outlays since they awarded grants late in FY 2013 and their grantees did not begin expending funds until FY 2014.
  • SAMHSA’s CY+1 outlays are based on remaining funds that could potentially be spent by grantees. This total may be restated in the FY 2016 AFR.
  • NIH Research is projecting to maintain its error rate of 2.29 percent in FY 2016. NIH expects that its error rate will remain constant in FY 2016 due to projected difficulties obtaining documentation from grantees, and the Disaster Relief Act’s requirement that all funding be expended within two years.
  • The “Total” does not represent a true statistical estimate for the agency.

Table 1C
Improper Payment Reporting for All Programs
FY 2014 - FY 2018 (in Millions)

Name

PY Outlays $

PY IP %

PY IP $

CY Outlays $

CY IP %

CY IP $

CY Over payment $

CY Under payment $

CY Net IP %

CY Net IP $

Sub-Total of OMB Determined Risk-Susceptible Programs from Table 1A

831,698

9.4

78,383.20

882,173.48

10.18

89,775.39

83,726.01

6,049.38

8.81

77,676.63

Sub-Total of Superstorm Sandy Programs from Table 1B

105.39

8.63

9.10

272.48

0.53

1.44

1.42

0.01

0.58

1.41

TOTAL ALL PROGRAMS
Note (12)

831,803.39

9.4

78,392.30

882,445.96

10.17

89,776.83

83,727.43

6,049.39

8.80

77,678.04

 

Name

CY+1 Est. Outlays $

CY+1 IP %

CY+1 IP $

CY+2 Est. Outlays $

CY+2 IP %

CY+2 IP $

CY+3 Est. Outlays $

CY+3 IP %

CY+3 IP $

Sub-Total of OMB Determined Risk-Susceptible Programs from Table 1A

1,047,880.14

10.24

107,257.00

1,106,346.71

9.42

104,176.82

1,122,559.02

8.03

90,138.61

Sub-Total of Superstorm Sandy Programs from Table 1B

141.96

0.40

0.57

104.81

0.23

0.24

N/A

N/A

N/A

TOTAL ALL PROGRAMS
Note (12)

1,048,022.10

10.23

107,257.57

1,106,451.52

9.42

104,177.06

1,122,559.02

8.03

90,138.61

The “Total” does not represent a true statistical estimate for the agency.

10.0 Improper Payment Root Cause Categories

Appendix C to OMB Circular A-123, which was updated and released in October 2014, requires the reporting of improper payment root causes by agencies with high-risk programs. The following tables display HHS’s improper payment root causes for FY 2015 for each high-risk program. There is a separate column for each program. The tables include categories of improper payments and the amount of overpayment or underpayment associated with each improper payment category. Additional information on the root causes, and corrective actions, for each high-risk program can be found in each program-specific reporting section.

Table 2A
Medicare Improper Payment Root Cause Category Matrix
FY 2015 (in Millions)

Reason for Improper Payment

Medicare FFS

Medicare Part C Note 1

Medicare Part D Note 2

Overpayments

Underpayments

Overpayments

Underpayments

Overpayments

Underpayments

Program Design or Structural Issue

 

 

 

 

 

 

Inability to Authenticate Eligibility

           

Failure to Verify:

Death Data

           

Financial Data

           

Excluded Party Data

           

Prisoner Data

           

Other Eligibility Data (explain)

           

Administrative or Process Error Made by:

Federal Agency

           

State or Local Agency

           

Other Party (e.g., participating lender, health care provider, or any other organization administering Federal dollars)

$4,850.21

$1,257.03

 

$3,851.96

 

$408.50

Medical Necessity

$7,502.84

$0.23

       

Insufficient Documentation to Determine

$29,715.30

 

$10,265.04

 

$1,825.75

 

TOTAL

$42,068.35

$1,257.26

$10,265.04

$3,851.96

$1,825.75

$408.50

Notes:

  1. Underpayments in the Medicare Part C program occur when plans do not submit relevant diagnosis information for payment, but are subsequently found by HHS during medical record review.
  2. Underpayments in the Medicare Part D program are mainly due to discrepancies in prescription drug event documentation.

Table 2B
Medicaid and CHIP Improper Payment Root Cause Category Matrix
FY 2015 (in Millions) Note 3

Reason for Improper Payment

Medicaid

CHIP

Overpayments

Underpayments

Overpayments

Underpayments

Program Design or Structural Issue

       

Inability to Authenticate Eligibility

$8,509.11

$244.17

$371.71

$4.05

Failure to Verify:

Death Data

       

Financial Data

       

Excluded Party Data

       

Prisoner Data

       

Other Eligibility Data (explain)

       

Administrative or Process< Error Made by:

Federal Agency

       

State or Local Agency

$16,718.23

$263.51

$169.02

$1.63

Other Party (e.g., participating lender, health care provider, or any other organization administering Federal dollars)

$795.46

$14.49

$15.40

$0.35

Medical Necessity

$1.36

 

$0.09

 

Insufficient Documentation to Determine

$2,603.35

 

$70.05

 

TOTAL

$28,627.51

$522.17

$626.27

$6.03

Notes:
 

  1. The Medicaid and CHIP underpayment totals reported in this table are greater than the underpayment totals displayed in Table 1A, which excludes underpayments that may have also been counted as overpayments.

Table 2C
Foster Care and Child Care Improper Payment Root Cause Category Matrix
FY 2015 (in Millions)

Reason for Improper Payment

Foster Care

Child Care

Overpayments

Underpayments

Overpayments

Underpayments

Program Design or Structural Issue

       

Inability to Authenticate Eligibility

       

Failure to Verify:

Death Data

       

Financial Data

       

Excluded Party Data

       

Prisoner Data

       

Other Eligibility Data (explain)

       

Administrative or Process Error Made by:

Federal Agency

       

State or Local Agency

$28.20

$2.48

$226.74

$26.24

Other Party (e.g., participating lender, health care provider, or any other organization administering Federal dollars)

       

Medical Necessity

       

Insufficient Documentation to Determine

   

$58.15

 

Other Reason (a) (explain)

       

Other Reason (b) (explain)

       

TOTAL

$28.20

$2.48

$284.89

$26.24

Table 2D
ACF Superstorm Sandy Improper Payment Root Cause Category Matrix
FY 2015 (in Millions)

Reason for Improper Payment

Social Services Block Grant

Family Violence Prevention and Services

Overpayments

Underpayments

Overpayments

Underpayments

Overpayments

Underpayments

Program Design or Structural Issue

           

Inability to Authenticate Eligibility

           

Failure to Verify:

Death Data

           

Financial Data

           

Excluded Party Data

           

Prisoner Data

           

Other Eligibility Data (explain)

           

Administrative or Process Error Made by:

Federal Agency

           

State or Local Agency

$0.0616

 

$0.2488

$0.000021

$0.00794

 

Other Party (e.g., participating lender, health care provider, or any other organization administering Federal dollars)

   

$0.0603

$0.006381

   

Medical Necessity

           

Insufficient Documentation to Determine

   

$0.1484

     

TOTAL

$0.0616

 

$0.458

$0.006

$0.00794

 

Table 2E
ASPR, CDC, SAMHSA, and NIH Superstorm Sandy Improper Payment Root Cause Category Matrix
FY 2015 (in Millions)

Reason for Improper Payment

ASPR Research

CDC Research

SAMHSA

NIH Research

Over-
payments

Under-
payments

Over-
payments

Under-
payments

Over-
payments

Under-
payments

Over-
payments

Under-
payments

Program Design or Structural Issue

               

Inability to Authenticate Eligibility

               

Failure to Verify:

Death Data

               

Financial Data

               

Excluded Party Data

               

Prisoner Data

               

Other Eligibility Data (explain)

               

Administrative or Process Error Made by:

Federal Agency

               

State or Local Agency

               

Other Party (e.g., participating lender, health care provider, or any other organization administering Federal dollars)

       

$0.0101

$0.0081

   

Medical Necessity

               

Insufficient Documentation to Determine

           

$0.885

 

TOTAL

       

$0.0101

$0.0081

$0.885

 

 

 


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Content created by Office of Finance (OF)
Content last reviewed on June 6, 2019