Medicare decides to not claw back extrapolated overpayments

Taxpayers want to know that their dollars are well spent, and people talking about the budget for the federal government frequently talk about Medicare expenses. In that context, Kaiser Health News commented on a surprising decision that the Centers for Medicare & Medicaid Services (CMS) made to not require insurance companies to refund overpayments. CMS had paid $54 million annually to audit Medicare Advantage plans, and found overpayments to insurance companies in nearly 80% of the audits for 2011 to 2013. Despite CMS' own previous estimate overpayments of $650 million during those years (which some analysts thought were low), CMS now appears to not be concerned about those overpayments, from 2011 to 2017.

It appears that the audits only sampled a small patient population, and that CMS is requiring refunds of overpayments found in that sample. However, contrary to what seems like reasonable and customary practice, CMS is apparently waiving refunds for extrapolated overpayments (i.e. the amounts that would be expected if the patient samples were representative of the insurance plans' entire populations). While $650 million is a small percentage of Medicare's overall annual budget, the absolute number seems large enough to fund other meaningful initiatives that could help improve health care in the future.