Of the $4 trillion spent by the government in 2017, nearly $141 billion were improper payments. These are payments made in error either to the wrong recipient, in the incorrect amount, or for a service that is not legitimate. Fraud, antiquated data systems, and methodologies all contribute to the wasteful spending.

Earlier this year, President Trump’s administration announced their efforts to address the problem with the CAP Goal Action Plan, Getting Payments Right. The plan takes a cross-agency approach to reduce the cost associated with improper payments while also improving the efficiencies of government programs.

Prevention of Improper Payments

For starters, the CAP emphasizes implementing preventative measures in order to reduce improper payments before there is ever a need for post-payment recovery. Recovery efforts are largely ineffective and agencies typically recover much less than what was originally paid.

Strengthening Partnership

The plan also noted the importance of strengthening partnerships between states and federal agencies to reduce improper payments made by federally funded state-administered programs. Currently, states access federal databases for data matching and analytics in order to prevent and identify improper payments. Unfortunately, much of the data is not current, complete, or accurate. Under the CAP, agencies are directed to identify state agency partners that will help in screening and determining eligibility before payments are made.

Medicaid is one of the largest government programs that suffer from improper payments. While fraud does occur within the program, it is not the primary contributor to improper claims payments. The problem Medicaid faces is that eligibility data are housed in massive data repositories, and that data is mostly stale, old, and unusable. In order to provide the program with improved data, CMS is attempting to develop the Transformed Medicaid Statistical Information System (T-MSIS), but it is years away from completion.

Cost Avoidance and Improper Claims Payments

Aside from the Trump administration and CMS efforts to address improper payments, there is also progress being made within the private sector. Syrtis Solutions (Syrtis) recognized the need for a solution  to reduce the improper payment rate within the Medicaid program. The company is unique in that it utilizes e-prescribing eligibility data to provide the payer of last resort market with a technology-based solution to prospectively cost avoid pharmacy and medical claims. By implementing the new tool, Medicaid plans can maximize the efficiency of their adjudication processes while saving valuable resources.

Based on the administration’s plan, efforts from CMS and the private sector, it is clear that the most effective way to battle improper claims payments is with prevention. Moving forward, accurately identifying claims before they are paid and cost avoidance measures will be crucial steps to maximizing program efficiency. Additionally, improving the quality of data used to identify claims will be paramount.

Improper payments have cost the federal government and it’s taxpayers billions of dollars. While some of these payments are fraudulent, the vast majority are a result of poor quality data and outdated methodologies. Moving forward, it will be important for agencies and states to utilize new technologies in order to improve efficiency.