Error Rate Findings and Results

The Part C Improper Payment Measurement (IPM) estimates the beneficiary-level payment error for the sample and extrapolates the sample payment error estimate to the Part C population subject to risk adjustment, resulting in the Part C gross payment error amount.

The Part C IPM fiscal year (FY) 2023 Payment Error Rate Results document, available for download, includes information related to payment error results, overpayments / underpayments, key findings, and discrepant CMS-Hierarchical Condition Category (CMS-HCC).

Key Terms

CMS Hierarchical Condition Category (CMS-HCC) model– The CMS-HCC model uses more than 9,000 International Classification of Diseases 10th revision, Clinical Modification (ICD-10-CM) codes, which are mapped to condition categories used to estimate costs. The condition categories are based on diagnoses clinically related to one another and with similar predicted cost implications. Hierarchies are imposed on the condition categories to capture the costliest diagnoses. Hierarchy logic is imposed on certain condition categories to account for different hierarchical costs, thus, the term Hierarchical Condition Category, or HCC.

Discrepant CMS-HCCs – CMS-HCCs that were not confirmed during medical record review. Payment errors result because the medical records did not support the CMS-HCCs for which the Medicare Advantage (MA) Organization received a payment.

Gross Improper Payments - The absolute value of the sum of overpayments (including overpayments due to missing or insufficient documentation) and underpayments.

Monetary Loss – A subset of improper payments where the wrong recipient was paid or the correct recipient was paid the wrong amount for Medicare Part C. Specifically, monetary loss results when medical record documentation submitted by the MA Organization does not substantiate a condition for which it received payment. 

Non-Monetary Loss – The non-monetary loss component of improper payments is comprised of dollar amounts associated with conditions identified during the medical review process that the MA Organization did not submit for payment.

Overpayment - Overpayments occur when the MA Organization submits medical records that do not support the CMS-HCC(s) for which it received payment.

Underpayment – As reflected in the FY 2023 Part C improper payment rate, underpayments occur when the MA Organization submits medical records that support a higher level CMS-HCC payment than the original CMS-HCC submitted for payment.