If you have been reading my blog for any length of time, you have heard this before. Medicare’s claim processing is ineffective. The often heard rhetoric about Medicare’s low administration cost as indicating the value of single payer is misguided.
To change this would require more expense and slower claim payments, but there are billions of dollars at stake and the health insurance Trust is running out of money.
According to a recent report from the Commonwealth Fund, more than a quarter of all Medicare beneficiaries — 15 million people — spend a staggering 20 percent or more of their income on premiums plus medical care. And, for low income beneficiaries or those with chronic conditions and functional limitations, out-of-pocket costs add up very fast putting many seniors at significant financial risk.
While most beneficiaries expect to pay legitimate out-of-pocket costs, the shared costs within the Medicare program are likely over inflated due to rampant improper billing. Each year, providers bill an extra $40 billion improperly due to simple billing mistakes — double billing, up-coding, billing for unnecessary services, or even billing for services and medications that were never provided to the patient in the first place.
Meanwhile, beneficiaries are not well equipped to be able to discern valid out-of-pocket costs from those that have been improperly billed, making them responsible to pay much more than if their bill had been accurate.
Why is this happening? The Centers for Medicare & Medicaid Services (CMS) currently only requires 0.5 percent of provider Medicare claims to be reviewed for billing accuracy. This means that the program approves 99.5 percent of Medicare claims submitted by providers without a review for billing accuracy, or any comparison to the patient’s actual medical record.
In contrast, the private insurance industry provides enrollees a much higher level of protection against medical billing errors, requiring that as much as 100 percent of claims be reviewed for accuracy. The lack of billing oversight within Medicare is startling and has contributed to a fiscal crisis both for the program and aging beneficiaries who expect affordable, reliable care and coverage.
Furthermore, according to the Medicare Trustees, significant budget shortfalls have caused program solvency concerns, triggering Medicare coverage cuts that will go into effect in 2029. In just 11 years, Medicare will permanently scale back Part A (hospital) coverage to 88 percent of what’s covered today – increasing the financial responsibility of Medicare beneficiaries.