Content created by Assistant Secretary for Financial Resources (ASFR)
Fiscal Year 2024
Released March, 2023
Topics on this page: Objective 5.2: Sustain strong financial stewardship of HHS resources to foster prudent use of resources, accountability, and public trust | Objective 5.2 Table of Related Performance Measures
Objective 5.2: Sustain strong financial stewardship of HHS resources to foster prudent use of resources, accountability, and public trust
HHS supports strategies to sustain strong financial stewardship of resources. The Department continues to strengthen the financial management environment to prevent and mitigate deficiencies. HHS is focused on upholding accountability, transparency, and financial stewardship of HHS resources to ensure program integrity, effective internal controls, and payment accuracy. The Department is also building an enhanced financial management workforce that is better able to keep pace with changing contexts.
The Office of the Secretary leads this objective. All divisions are responsible for implementing programs under this strategic objective. In consultation with OMB, HHS has determined that performance toward this objective is progressing. The narrative below provides a brief summary of progress made and achievements or challenges, as well as plans to improve or maintain performance.
Objective 5.2 Table of Related Performance Measures
| FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | |
|---|---|---|---|---|---|---|---|---|
| Target | 6.6 %40 | 7 %41 | 7 %42 | 6 % | N/A43 | N/A | N/A | TBD |
| Result | 7.1 % | 7.56 % | 4.85 % | 3.36 % | N/A | N/A | N/A | N/A |
| Status | Target Not Met | Target Not Met | Target Exceeded | Target Exceeded | Target Not in Place44 | Target Not in Place | Target Not in Place | Target Not in Place |
The Foster Care program provides matching reimbursement funds for foster care maintenance payments, costs for comprehensive child welfare information systems, training for staff, as well as foster and adoptive parents, and administrative costs to manage the program. Administrative costs that are covered include the work done by caseworkers and others to plan for a foster care placement, arrange therapy for a foster child, train foster parents, and conduct home visits to foster children, as well as more traditional administrative costs, such as automated information systems and eligibility determinations. ACF estimates the national Foster Care payment error rate and develops an improvement plan to strategically reduce, or eliminate where possible, improper payments under the program. State-level data generated from the title IV-E eligibility reviews are used to develop a national error rate estimate for the program. Eligibility reviews are routinely and systematically conducted by ACF in the states, the District of Columbia, and Puerto Rico to ensure that foster care maintenance payments are made only for program-eligible children in eligible placements. The fiscal accountability promoted by these reviews has contributed to a general trend of reductions in case errors and program improvements.
The FY 2019 foster care error rate was 4.85 percent, which exceeded the target of 7 percent. In FY 2020, ACF set an error rate target of 6.00 percent, recognizing that changes in Title IV-E Foster Care eligibility requirements made by the Family First Prevention Services Act may contribute to increased improper payments as states adjusted to changes in law affecting eligibility, particularly for children placed in child care institutions. Due to the COVID-19 pandemic, ACF made the decision to postpone IV-E reviews beginning in the Spring of 2020 until it is again safe to travel and meet onsite. Therefore, ACF has not yet conducted reviews for states subject to the updated child care institution safety check requirements. The error rate for FY 2020 was, therefore, based on updated review data for six states as well as previous years’ data for other states. Encouragingly, the improper error rate decreased from 4.85 percent in FY 2019 to 3.36 percent in FY 2020 because five out of the six states that were newly reviewed had decreases in error rates. In particular, two states with large programs (and thus more impact) had substantial decreases of more than 13 percent in their state-level error rates.
ACF chose not to set an improper payment reduction target for FY 2021 and FY 2022 given the ongoing COVID-19 public health emergency as it is uncertain when it will be safe to resume conducting onsite Title IV-E Reviews. In light of this uncertainty, as well as the unknown impact of the programmatic changes in title IV-E foster care eligibility made by the Family First Prevention Services Act on the improper payment rate, ACF will not report on the improper payment reduction rate in FY 2021 and FY 2022, and the targets for FY 2023 and FY 2024 will be determined at a later date. ACF will continue to work with all states to ensure that they have a clear understanding of changes in federal eligibility requirements and are prepared to successfully manage Title IV-E eligibility determinations for their Foster Care programs.
| FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | |
|---|---|---|---|---|---|---|---|---|
| Target | $5.20 | $5.20 | $5.20 | $5.20 | $5.20 | $5.20 | $5.20 | $5.20 |
| Result | $5.15 | $5.14 | $5.06 | $5.51 | $5.27 | Nov 30, 2023 | Nov 30, 2024 | Nov 30, 2025 |
| Status | Target Not Met | Target Not Met | Target Not Met | Target Exceeded | Target Exceeded | Pending | Pending | Pending |
The purpose of the Child Support Enforcement program is to provide funding to states to support state-administered programs of financial assistance and services for low-income families to promote their economic security, independence, and self-sufficiency. This performance measure calculates efficiency by comparing total IV-D dollars collected and distributed by states with total IV-D dollars expended by states for administrative purposes; this is the Child Support Performance and Incentive Act (CSPIA) cost-effectiveness ratio (CER). The formula for determining the CER is the total collections distributed, plus the collections forwarded to other states and countries for distribution, and fees retained by other states, divided by the administrative expenditures, less the non-IV-D administrative costs. In FY 2021 the national CER ratio was $5.27. While this performance exceeded the target for FY21, it is important to note that there are many programmatic and economic variables that this measure does not account for. For example, we saw significant improvement last year due to the surge in collections primarily due to offsets from increased unemployment insurance benefits and economic impact payments because of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In FY 2021, the CER declined from $5.51 (previous year) to $5.27 when collection surges leveled off. Similarly, increases in total IV-D dollars expended on program investments may decrease the CER initially, even though the investment may ultimately lead to increased program performance. Since continued fluctuations are expected, the $5.20 target is maintained through FY 2024.
ACF will continue to focus on increased efficiency of state programs through approaches such as automated systems of case management and enforcement techniques, administration simplifications, improving collaboration with families and partner organizations, and building on evidence-based innovations. The Child Support Program has continued to promote and advance key priorities that have a direct and positive impact on states, territories, and tribes and, most importantly, families. Maintaining investments in vital programs that serve to reduce poverty and improve families’ economic stability are effective ways to avoid public assistance costs and save money long-term. Furthermore, the Child Support Program serves mostly families with modest incomes who are more likely to spend the child support money quickly to meet basic household needs.
| FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | |
|---|---|---|---|---|---|---|---|---|
| Target | 9.50 % | 8.08 % | 7.90 % | 7.77 % | N/A | 9.69 % | 5.77% | TBD45 |
| Result | 8.31 % | 8.10 %46 | 7.87 % | 6.78 % | 10.28 % | 5.42% | Nov 15, 2023 | Nov 15, 2024 |
| Status | Target Exceeded | Target Met | Target Exceeded | Target Exceeded | Historical Actual | Target Exceeded | Pending | Target Not In Place |
In FY 2022, CMS reported an actual improper payment estimate of 5.42 percent or $13.94 billion. CMS finalized a policy regarding treatment of spontaneous “additionals” in the improper payment rate calculation. Diagnoses that were not submitted to CMS for payment have been excluded from the payment error calculation to get a true measure of payment error. In previous years, these potential payments were reflected in the underpayment rate and overall payment error calculation; however, including the spontaneous “additionals” in the gross underpayment portion resulted in an overstatement of the overall improper payment rate. The implemented policy contributed to a decrease in the projected Part C improper payment rate, representing a new baseline improper payment rate for Part C and is not directly comparable with prior reporting years. Moreover, FY 2021 also represented a new baseline due to various methodology changes, most significantly, a refined denominator calculation.
The Part C Improper Payment Measurement (IPM) methodology estimates improper payments resulting from errors in beneficiary risk scores. The primary component of most beneficiary risk scores is clinical diagnoses (the CMS Hierarchical Condition Category [CMS-HCC]) submitted by the MA Organizations. To calculate the projected error rate, CMS selects a random sample of enrollees with one or more CMS-HCCs and requests medical records to support each condition. If medical records do not support the diagnoses submitted to HHS the risk scores may be inaccurate and result in payment errors.
In FY 2022, CMS selected a stratified random sample of beneficiaries with a risk adjusted payment in Payment Year 2020 (where the strata are high, medium, and low risk scores) and reviewed medical records of the diagnoses submitted by plans for the sample beneficiaries. CMS establishes improper payment rate targets only for the next fiscal year; therefore, the FY 2024 target will be established in the FY 2023 HHS AFR.
The primary error type of Medicare Part C improper payments consists of medical record discrepancies (4.74 percent in overpayments and 0.49 percent in underpayments), with a smaller portion of improper payments resulting from insufficient documentation to determine whether proper or improper (0.19 percent). Improper payments due to medical record discrepancies occur when medical record documentation submitted by the MA Organization does not substantiate the CMS-HCC for which it received payment. The underpayment component is comprised of risk scores identified during the medical review process that the MA Organization did not submit for payment.
The factors contributing to improper payments are complex and vary from year to year. Each year, CMS outlines actions the agency will implement to prevent and reduce improper payments in Medicare Part C. Detailed information on corrective actions can be found in the 2022 HHS AFR.
| FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | |
|---|---|---|---|---|---|---|---|---|
| Target | 3.3 % | 1.66 % | 1.65 % | 0.74 % | 1.14 % | 1.20 % | 1.64% | TBD48 |
| Result | 1.67 % | 1.66 % | 0.75 % | 1.15 % | 1.33 % | 1.54% | Nov 15, 2023 | Nov 15, 2024 |
| Status | Target Exceeded | Target Met | Target Exceeded | Target Not Met | Target Met | Target Met | Pending | Pending |
In FY 2022, CMS reported an improper payment estimate of 1.54 percent of total outlays or $1.36 billion. The improper payment estimate due to missing or insufficient documentation is 1.21 percent or $1.07 billion, representing 78.49 percent of total improper payments. The increase from the prior year’s estimate of 1.33 percent is due to year-over-year variability and is not statistically different from the prior year. As the rate is already low, variation in sampled error types and amounts can cause minor shifts in the total estimated error rate. Per OMB guidance, CMS establishes improper payment rate targets only for the next fiscal year, therefore the FY 2024 target will be established in the FY 2023 HHS AFR.
The Part D program payment error estimate measures the payment error related to Prescription Drug Event (PDE) data, where most errors for the program exist. CMS measures inconsistencies between information reported on PDEs and supporting documentation submitted by Part D sponsors: prescription record hardcopies (or medication orders as appropriate) and detailed claims information. Based on these reviews, each PDE in the audit sample is assigned a gross drug cost error. A representative sample of beneficiaries undergoes a simulation to determine the Part D improper payment estimate.
The FY 2022 Medicare Part D improper payment error categories are drug or drug pricing discrepancies (0.29 percent in Overpayments and 0.04 percent in Underpayments) and insufficient documentation to determine whether proper or improper (1.21 percent). Improper payments due to drug or drug pricing discrepancies occur when the prescription documentation submitted indicates that an overpayment occurred. Underpayments result when prescription record hard copies (or medication orders) indicate that CMS should have paid more.
The factors contributing to improper payments are complex and vary from year to year. Each year, CMS outlines actions the agency will implement to prevent and reduce improper payments in Medicare Part D. Detailed information on corrective actions can be found in the FY 2022 HHS AFR.
| FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | |
|---|---|---|---|---|---|---|---|---|
| Target | 10.40 % | 9.40 % | 8.00 % | 7.15 % | 6.17 % | 6.16 % | 7.36% | TBD49 |
| Result | 9.51 % | 8.12 % | 7.25 % | 6.27 % | 6.26 %50 | 7.46% | Nov 15, 2023 | Nov 15, 2024 |
| Status | Target Exceeded | Target Exceeded | Target Exceeded | Target Exceeded | Target Met | Target Not Met | Pending | Target Not In Place |
The Medicare Fee-for-Service (FFS) improper payment rate is calculated by the Comprehensive Error Rate Testing (CERT) program and reported in the Department of Health and Human Services (HHS) Agency Financial Report (AFR) on an annual basis. Information on the Medicare FFS improper payment methodology can be found in the FY 2022 HHS AFR. Starting in FY 2017, per OMB guidance, CMS establishes improper payment rate targets only for the next fiscal year. Therefore, the FY 2024 target will be established in the FY 2023 HHS AFR.
In August 2020, CMS resumed CERT program activities that had been paused due to COVID-19, thus impacting the FY 2022 reporting period. As a result, the improper payment rate reflects processes that had a 2-month delay in contacting providers and suppliers for documentation and an adjusted sample size. In addition, the waivers and flexibilities provided by CMS for providers and suppliers during COVID-19 apply to all claims in the FY2022 reporting period.
The Medicare FFS improper payment estimate for FY 2022 is 7.46 percent, or $31.46 billion. While the factors contributing to improper payments are complex and vary by year, the primary causes of improper payments continue to be insufficient documentation and medical necessity errors as described in the following four driver service areas:
- Skilled Nursing Facilities (SNF): Insufficient documentation continues to be the major error reason for SNF claims. The improper payment estimate for SNF claims increased from 7.79 percent in FY2021 to 15.10 percent in FY2022. The primary reasons for these errors are missing documentation to support the level of care requirements and missing documentation to support the required components for the billed code.
- Hospital Outpatient: Insufficient documentation continues to be the major error reason for hospital outpatient claims. The improper payment estimate for hospital outpatient claims increased from 4.57 percent in FY2021 to 5.43 percent in FY2022; however, this change is not statistically significant. The primary reason for these errors is missing documentation to support the order, or the intent to order for certain services.
- Hospice: Both insufficient documentation and medically unnecessary were the major error reasons for hospice claims. The improper payment estimate for hospice claims increased from 7.77 percent in FY2021 to 12.04 percent in FY2022. The primary reasons for these errors are missing or insufficient documentation to support the certification or recertification and the hospice coverage criteria for medical necessity was not met.
- Home Health: Medically unnecessary was the major error reason for home health claims. The improper payment estimate for home health claims decreased from 10.24 percent in FY 2021 to 10.15 percent in FY 2022; however, this change is not statistically significant. The primary reason for these errors is that the home health coverage criteria for medical necessity was not met.
CMS develops and refines multiple preventive and detective measures for specific service areas with high improper payment estimates, such as hospital outpatient, SNF, home health, hospice, and other areas. CMS believes implementing targeted corrective actions will prevent and reduce improper payments in these areas and reduce the overall improper payment estimate. Detailed information on corrective actions can be found in the 2022 HHS AFR.
| FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | |
|---|---|---|---|---|---|---|---|---|
| Target | 9.57 % | 7.93 % | N/A51 | N/A52 | N/A53 | 18.94 % | 12.68% | TBD54 |
| Result | 10.10 % | 9.79 % | 14.90 %55 | 21.36 %56 | 21.69 %57 | 15.62% | Nov 15, 2023 | Nov 15, 2024 |
| Status | Target Not Met but Improved | Target Not Met but Improved | Historical Actual | Historical Actual | Historical Actual | Target Exceeded | Pending | Target Not In Place |
| FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | |
|---|---|---|---|---|---|---|---|---|
| Target | 7.38 % | 8.2 % | N/A58 | N/A59 | N/A60 | 27.88 %61 | 21.04% | TBD62 |
| Result | 8.64 % | 8.57 % | 15.83 %63 | 27 %64 | 31.84 %65 | 26.75% | Nov 15, 2023 | Nov 15, 2024 |
| Status | Target Not Met | Target Not Met but Improved | Historical Actual | Historical Actual | Historical Actual | Target Exceeded | Pending | Target Not In Place |
The Payment Error Rate Measurement (PERM) program measures improper payments for the FFS, managed care, and eligibility components of both Medicaid (MIP9.1) and CHIP (MIP9.2). CMS measures improper payments in 17 states each year to calculate a rolling, three-year national improper payment rate for both Medicaid and CHIP. The national Medicaid and CHIP improper payment rates reported in the FY 2022 HHS AFR are based on measurements that were conducted in FYs 2020, 2021, and 2022. Information on the Medicaid and CHIP statistical sampling process and review period can be found in the FY 2022 HHS AFR. Per OMB guidance, CMS establishes improper payment targets only for the next fiscal year, therefore the FY 2024 target will be established in the FY 2023 HHS AFR.
The national Medicaid improper payment estimate for FY 2022 is 15.62 percent or $80.57 billion. The national Medicaid component rates are 10.42 percent for Medicaid FFS, 0.03 percent for Medicaid managed care, and 11.89 percent for the Medicaid eligibility component.
The national CHIP improper payment estimate reflects reviews that accounted for certain flexibilities afforded to states during COVID-19, such as postponed eligibility determinations and reduced requirements around provider enrollment or revalidations. CMS will publish supplemental information related to the Medicaid results on the CMS website following AFR publication.
The areas driving the Medicaid improper payment estimate are:
- Insufficient Documentation: Represents situations where the required verification of eligibility data, such as income, was not done at all and where there is an indication that eligibility verification was initiated but the state provided no documentation to validate that the verification process was completed. This includes situations where medical records were either not submitted or were missing required documentation to support the medical necessity of the claim.
- State Non-Compliance: Represents noncompliance with federal eligibility redetermination requirements; enrolled providers not appropriately screened by the state; providers not appropriately rescreened at revalidation; providers not enrolled; and/or providers without the required National Provider Identifier on the claim. State compliance with provider enrollment or screening requirements has improved as the Medicaid FFS component improper payment estimate decreased from 13.90 percent in RY 2021 to 10.42 percent in RY 2022. COVID-19 review flexibilities afforded to states should also be considered in the identified decrease in the Medicaid FFS and eligibility components between RY 2021 and RY 2022.
The national CHIP improper payment estimate for FY 2022 is 26.75 percent or $4.30 billion. The national CHIP component rates are 11.23 percent for CHIP FFS, 0.62 percent for CHIP managed care, and 24.01 percent for the CHIP eligibility component.
The national CHIP improper payment estimate reflects reviews that accounted for certain flexibilities afforded to states during COVID-19, such as postponed eligibility determinations and reduced requirements around provider enrollment or revalidations. CMS will publish supplemental information related to the CHIP results on the Payment Error Rate Measurement page of the CMS website following AFR publication.
The areas driving the CHIP improper payment estimate are as follows:
- Insufficient Documentation: Represents situations where the required verification of eligibility data, such as income, was not done at all and where there is an indication that eligibility verification was initiated but the state provided no documentation to validate that the verification process was completed. This includes situations where medical records were either not submitted or were missing required documentation to support the medical necessity of the claim.
- Improper Determinations: Represents situations where the beneficiary was inappropriately claimed under Title XXI (CHIP) rather than Title XIX (Medicaid), mostly related to incorrect state calculations based on beneficiary income, the presence of third-party insurance, household composition, or tax filer status. Improper Determinations accounted for 14.68 percent or $0.63 billion of total errors cited in CHIP FFS, CHIP managed care and CHIP eligibility.
- State Non-Compliance: Represents noncompliance with federal eligibility redetermination requirements; enrolled providers not appropriately screened by the state; providers not appropriately rescreened at revalidation; providers not enrolled; and/or providers without the required National Provider Identifier on the claim. State compliance with provider enrollment or screening requirements has improved as the CHIP FFS component improper payment estimate decreased from 13.67 percent in RY 2021 to 11.23 percent in RY 2022. COVID-19 review flexibilities afforded to states should also be considered in the identified decrease in the CHIP FFS and eligibility components between RY 2021 and RY 2022.
The factors contributing to improper payments are complex and vary from year to year. In order to reduce the national Medicaid and CHIP improper payment rates, states are required to develop and submit states-specific Corrective Action Plans (CAPs) to CMS. Each year, CMS also outlines actions the agency will implement to prevent and reduce improper payments for all error categories on a national level. Detailed information on corrective actions can be found in the FY 2022 HHS AFR.
Endnotes
40 The FY 2017 target for this performance measure was updated as the result of IPIA reporting process as approved by HHS and OMB.
41 The FY 2018 target for this performance measure was updated as the result of the IPIA reporting process as approved by HHS and OMB.
42 The FY 2019 target for this performance measure was updated as part of the Annual Financial Report process with the Office of Management and Budget (OMB).
43 In response to COVID-19, HHS postponed Title IV-E reviews beginning in the spring of FY 2020 to protect the health and safety of state and federal staff. Because the reviews provide data normally used to calculate the Foster Care error rate, the postponement of reviews results in HHS having no new data for FY 2021 or FY 2022. Therefore, HHS is not reporting data for this measure in FY 2021 or FY 2022. HHS anticipates resuming reviews in 2023, but does not expect to have information needed to calculate an error rate until FY 2024.
44 HHS has chosen not to set a target for this performance measure for 2021 due to policy changes and the unknown impact of the COVID-19 public health emergency.
45 The FY 2024 target will be established in the FY 2022 HHS AFR and FY 2023 HHS AFR, respectively
46 CMS uses Payment Integrity Information Act (PIIA) standards, rather than GPRAMA standards, for performance reporting on improper payments. Programs with established valid and rigorous estimation methodologies should count reduction targets as being met if the 95% confidence interval includes the reduction target.
47 CMS uses Improper Payments Elimination and Reduction Act (IPERA) standards, rather than GPRAMA standards, for performance reporting on improper payments. According to A-123 guidance on IPERA, programs with established valid and rigorous estimation methodologies should count reduction targets as being met if the 95% confidence interval includes the reduction target.
48 Starting in FY 2017, per OMB guidance, CMS establishes improper payment rate targets only for the next fiscal year. Therefore, the FY 2024 target will be established in the FY 2023 HHS AFR.
49 The FY 2024 target will be established in the FY 2023 HHS AFR
50 CMS uses Payment Integrity Information Act (PIIA) standards, rather than GPRAMA standards, for performance reporting on improper payments. Programs with established valid and rigorous estimation methodologies should count reduction targets as being met if the 95% confidence interval includes the reduction target.
51 2019 is the first year the eligibility component measurement is resumed. Targets will not be established until all three cycles have been measured for eligibility.
52 2019 is the first year the eligibility component measurement is resumed. Targets will not be established until all three cycles have been measured for eligibility.
53 2019 is the first year the eligibility component measurement is resumed. Targets will not be established until all three cycles have been measured for eligibility.
54 Starting in FY 2017, per OMB guidance, CMS establishes improper payment rate targets only for the next fiscal year. Therefore, the FY 2024 target will be established in the FY 2023 HHS AFR.
55 2019 is the first year the eligibility component measurement is resumed, therefore results in FY 2019 do not reflect all states under the new eligibility methodology.
56 2019 is the first year the eligibility component measurement is resumed, therefore results in 2020 do not reflect all states under the new eligibility methodology.
57 2019 is the first year the eligibility component measurement is resumed, therefore results in FY 2021 may not reflect all states under the new eligibility methodology.
58 2019 is the first year the eligibility component measurement is resumed. Targets will not be established until all three cycles have been measured for eligibility.
59 2019 is the first year the eligibility component measurement is resumed. Targets will not be established until all three cycles have been measured for eligibility.
60 2019 is the first year the eligibility component measurement is resumed. Targets will not be established until all three cycles have been measured for eligibility.
61 The FY 2021 AFR will report a target established for 2022.
62 The FY 2024 target will be established in the FY 2023 HHS AFR.
63 2019 is the first year the eligibility component measurement is resumed, therefore results in FY 2019 do not reflect all states under the new eligibility methodology.
64 2019 is the first year the eligibility component measurement is resumed, therefore results in FY 2020 do not reflect all states under the new eligibility methodology.
65 2019 is the first year the eligibility component measurement is resumed, therefore results in FY 2021 do not reflect all states under the new eligibility methodology.