Medicare Part C Improper Payment Measurement (IPM)

Medicare Part C Improper Payment Measure 

The Centers for Medicare & Medicaid Services (CMS) annually identifies, measures, and reports erroneous Medicare Part C payments. Since fiscal year (FY) 2008, CMS has submitted an annual Part C improper payment estimate and the estimation methodology to Congress in the Agency Financial Report (AFR). This page highlights important details about the payment error rate and provides useful links and resources to learn more.

Part C Payment Error Rates from FY 2016 – FY 2023

For FY 2023, CMS reported an Improper Payment Measure (IPM) for the Part C program based on Payment Year 2021 (PY 2021). In FYs 2021 and FY 2022, CMS implemented methodology and policy changes, and FY 2023 establishes a baseline. The FY 2023 error rate calculation follows those previously implemented policy changes. While FY 2023 and FY 2022 are comparable, they are not directly comparable to earlier reporting years. Details on the policy changes can be found in the United States (U.S.) Department of Health and Human Services (HHS) Agency Financial Report (AFR). Table 1 presents results from the Part C IPM Error Estimates for FY 2016 – FY 2023.  

Table 1:  Part C Payment Error Estimates for FY 2016 – FY 2023

^{1 The reporting year reports on payment year data from two years prior (e.g., FY 2022 error estimate is based on PY 2020 payments).}                                                                 

^{2 Gross payment error is calculated by taking the sum of the absolute values of the underpayments and overpayments (including overpayments due to missing or insufficient documentation).}                                                                                                                       

^{3 Net payment error is the difference between total overpayments (including overpayments due to missing or insufficient documentation) and the absolute value of the total underpayments.}

^{4 CMS made significant methodology changes during the past two years’ reporting (FY 2021 and FY 2022), and FY 2023 establishes a baseline. CMS expects the FY 2024 rate to be statistically similar to the FY 2023 rate; however, CMS will continue to observe how the rate fluctuates over the next couple of years when setting CY+1 targets. For FY 2024, CMS establishes a relationship mid-way between the upper limit of the 95 percent confidence interval and the current year IPM estimated error rate to provide a realistic outyear target.} 

The authority for CMS activities in Medicare Part C is outlined in the Payment Integrity Information Act of 2019 (PIIA) Public Law (116-117), signed March 2, 2020. PIIA revoked the Improper Payments Information Act (IPIA) of 2002 and its subsequent amendments. It also revoked the Fraud Reduction and Data Analytics Act (FRDAA) of 2015. PIIA incorporates relevant provisions from these four acts into a single subchapter in the United States Code.