One of our recent posts highlighted that the Centers for Medicare and Medicaid Services (CMS) reported $10.8 billion in improper Medicare payments in FY07, or 3.5% of Medicare spending. Fortunately, CMS is fighting back with an innovative program.

According to a Wall Street Journal post, auditors have recovered over $700 million in overpayments to hospitals and other medical providers through a program that shares portions of the recovery with contractors who find the errors or fraud. This recovery was achieved in only a half dozen states, although CMS is pushing to move the program nation-wide.

Some may decry a "repo man" approach, but we should also point out that CMS has been using advanced statistical tools to analyze payments more thoroughly to identify potential errors and fraud, which likely supports the fact that only 14% of the cases in the program were appealed and only 4.6% were overturned. The program even found $38 million in payments that should have been made but weren't.

In a tightening government fiscal environment, this found money is well worth the effort, both for the Feds and the States, and these strategies (both technologies and processes) have applications across government. We also hope that CMS has completed the loop with feedback into how the overpayments were made in the first place.