Payment Integrity Act of 2019 Explained

In early 2020, the Payment Integrity Information Act of 2019 (PIIA) was signed into law. The intent of the act was to decrease the number of improper payments made by various United States government agencies. During the fiscal year 2019, federal entities made $175 billion in improper payments, according to a report by the U.S. Government Accountability Office (GAO). The same report notes that this number comes from potentially unreliable agency estimates, so the real number could be much higher.

In response to widespread incompetence in estimation, risk assessment, reporting, and a general lack of compliance, the PIIA completely restructured federal entities’ payment reporting requirements. It also repealed and replaced outdated laws including the Improper Payments Information Act of 2002, the Improper Payments Elimination and Recovery Act of 2010, the Improper Payments Elimination Recovery Act of 2012, and the Fraud Reduction and Data Analytics Act of 2015.

This blog post covers some basic information on the Payment Integrity Information Act of 2019, or PIIA, and examines its effects on healthcare reimbursement. 

Payment Integrity Information Act of 2019

While the PIIA does retain some of the older legislation’s more useful parts, it significantly modifies the former laws and adds more prerequisites to the reporting process. It now requires federal agency leaders to publish the names of high-risk programs or activities in an annual report after a thorough assessment. This report is available to the public, at Paymentaccuracy.gov.

The GAO describes an improper payment as “payments that should not have been made or were made in the incorrect amount.” The issue of improper payments has long permeated many federal agencies and grown in significance enough to prompt five versions of the same law over the last two decades. 

For FY 2021, the GAO estimates that federal agencies made around $281 billion dollars in improper payments—a sharp increase from $206 billion in FY 2020. The PIIA could significantly impact healthcare reimbursement because the bulk of improper payments can be attributed to Medicare and Medicaid.

Key Changes

The PIIA encourages greater collaboration and transparency between individual federal agencies, the Office of Management and Budget (OMB), and the Office of Inspector General (OIG) to reduce government-wide improper payments. The OMB reports estimates of improper payments and offers federal agencies guidance with risk mitigation strategies to establish better payment controls. These efforts mirror some of the bill’s major changes. 

Improved Risk Assessment

Agencies must demonstrate plans to meet spending reduction goals and identify the improvements they have made by reducing improper payments. Agencies must also improve risk assessment of improper payments by scrutinizing some additional risk factors, including: 

• Similarities with other programs reporting improper payments 
• The accuracy of estimates for previous reports of improper payments 
• Any missing or incomplete information that could confirm eligibility 
• Whether or not a risk of fraud exists

During an evaluation, agencies prioritize factors that reveal the “most wanted”—the highest frequency or the most expensive improper payments. 

Enhanced Reporting Responsibilities

Under the FIIA, federal agencies must develop an annual report. This report functions like a self-audit of agency programs, practices, and funding—each viewed in the light of preventing, reducing, and recovering improper payments. The four new risk assessment factors inform the report’s initial section on preventative measures:  

• Identify programs flagged by risk assessment, particularly
  • programs that could be vulnerable to improper spending
  • programs with significant changes to risk assessment methods

• The report also includes actions to reduce improper payments
  • This section details the causes for improper payments and whether or not the agency has the required resources for prevention. It may also request resources needed to mitigate improper payments, and describes steps for meeting improper payment reduction goals.

• The final section details efforts to recover lost funds due to improper payments
  • Agencies must describe their methods for reducing improper payments. This includes, but is not limited to, a detailed breakdown by category of improper payments and a timeline of completed actions. It may also include a description and justification for any uncollectible amounts.

Mandatory Recovery Audits

Finally, the PIIA requires agencies to create and carry out recovery audits for programs that spend more than $1 million annually. Each agency’s inspector general must determine whether or not they meet PIIA compliance requirements. Agencies found to be non-compliant will begin a remediation process with requirements that increase in stringency on an annual basis.

What Does PIIA 2019 Mean for Healthcare?

The PIIA addresses a historic pattern of gross overspending that seems endemic in government agencies. After identifying billions of dollars in “improper payments,” the bill strives to enhance accountability levels among all federal agencies and prevent such expensive mistakes in the future. 

Increased transparency has become a greater concern among lawmakers and constituents alike; after receiving life-saving pandemic subsidies, citizens now find the nation in the midst of an alleged recession. If the PIIA successfully encourages federal entities to prevent improper payments, it could save billions of dollars by simply eliminating risks without the need to recoup costs.

Because Medicare and Medicaid make the bulk of improper payments, reductions in improper spending could be beneficial for reference-based pricing and other self-funded health reimbursement models. Because many use Medicare as a benchmark to price medical procedures, lowered payments and reduced Medicare spending could translate to decreased overall healthcare spending.

In addition, increased payment transparency and the government’s crackdown on improper spending could result in better billing guidelines. Medicare’s improper payments have already decreased and the PIIA now coincides with historical lows in improper payment rates. 

It’s too soon to declare the PIIA a complete success, but it does appear to have a positive impact on healthcare reimbursement. 

Payment integrity is a focal point of shifting the balance of healthcare in the favor of patients. Members benefit from a transparent, streamlined process that optimizes the healthcare reimbursement process.

6 Degrees Health for Payment Integrity Expertise

6 Degrees Health was founded with the goal of making healthcare reimbursement into a more sustainable model that benefits patients. The Payment Integrity Information Act of 2019 was implemented because overspending is an all-too-common occurrence in healthcare. This affects not only government agencies but also translates to overspending by patients with traditional healthcare insurance and other reimbursement models.

6 Degrees Health utilizes industry expertise as well as powerful proprietary software to identify payment errors and negotiate lower healthcare prices. Our cost containment solutions, coupled with our experience in healthcare, can help lower your healthcare spend by up to 40%. 

Want to know more about the Payment Integrity Information Act of 2019? Speak to a representative today to find out how our reference-based pricing model can help you realize the true benefits of healthcare.