Medicare

Are private insurance carriers that process Medicare claims inappropriately denying, underpaying, or overpaying beneficiaries' claims? The Health Care Financing Administration (HCFA) uses two methods to assess how well private insurance carriers process Medicare claims: the Quality Assurance Program and the Contractor Performance Evaluation Program. Although the former measures the reliability of claims processing, it does not examine the validity of the criteria used to evaluate the accuracy of claims processing. Furthermore, the payment/deductible error rate is not a direct measure of underpayment because the rate combines three types of errors--underpayment, overpayment, and misapplied deductible payments. The criteria used to calculate Contractor Performance Evaluation Program scores include the amount of payment errors. The scores could be more complete, however, by adding a measure of the number of processing errors, including the inaccurate determination of medical necessity and appropriateness.