Medicare Costs And Fraud

You have probably heard the argument in favor of a government-run health care system that touts the low administrative costs associated with Medicare; more efficient than the private sector they say. Two things you should know; first those reported costs do not include all the costs of running Medicare because some costs are charged to other departments and second and most significant is the following:

Each year the Centers for Medicare and Medicaid Services pays more than $853 billion in health-care claims, amounting to almost 25% of the federal budget. But an estimated 10% of the claims paid are fraudulent. This year alone, the federal government will pay about $85 billion in fraudulent claims. That is more than the combined earnings of Exxon, Wells Fargo and Microsoft…

Most peo­ple would be sur­prised to hear that govern­ment healthcare programs are “trust-based” sys­tems that rely on the good faith of med­ical providers to bill only for le­git­i­mate ser­vices. The government does lit­tle to as­sess the le­git­i­macy of a claim be­fore pay­ing it. The results can be strik­ing…

CMS re­ceives about 4.4 mil­lion Medicare claims a day, but there isn’t a cen­tral lo­ca­tion for re­ceiv­ing and an­a­lyzing them. In­stead, a hodge­podge of pri­vate con­trac­tors is re­spon­sible for pay­ing dif­fer­ent types of Medicare claims from dif­fer­ent regions of the coun­try. Separate con­trac­tors are respon­si­ble for re­view­ing those claims to iden­tify fraud, but only af­ter they’ve been paid.

Wall Street Journal  11-6-15

Not enough money is spent on claim review! 

Here is an example of the trust-based approach for routine foot care from the Medicare workbook for providers:

Presumption of Coverage for Routine Services

Upon evaluating whether routine services are reimbursable, a presumption of coverage may be made where the evidence available shows certain physical and/or clinical findings are consistent with the diagnosis and indicate severe peripheral involvement. Please refer to the “Medicare Benefit Policy Manual,” Chapter 15, Section 290, for more information about applying this presumption.

When the routine services are rendered by a podiatrist, the Medicare Fee-For-Service (FFS) contractor may deem the active care requirement met. However, the claim or other available evidence must indicate that the patient has seen an M.D. or D.O. for treatment and/or evaluation of the complicating disease process six months before the routine-type services were rendered.

The Medicare FFS contractor may also accept the podiatrist’s statement that the diagnosing and treating M.D. or D.O. also concurs with the podiatrist’s findings about the severity of the peripheral
involvement indicated.

The result is that many seniors without specific medical conditions routinely have their toenails clipped.

In a backhanded defense of Medicare, it does what Americans expect; pay my claims and don’t ask questions. After all, isn’t claims management and scrutiny one of the major complaints against health insurance companies? 😜


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