Out-of-Pocket CostsAccording to the Centers for Medicare and Medicaid (CMS), more than 8.8 million Americans were signed up for 2017 coverage through HealthCare.gov as of January 14, 2017, up from 8.7 million on the same date in 2016. However, a recent report from The Hill says that widespread improper billing of Medicare beneficiaries is inflating their out-of-pocket costs. Besides putting seniors at significant financial risk, this is a reminder to physician practices and medical billing companies that improperly submitted and paid medical claims can lead to repayments with fines and penalties, and even exclusion from Medicare.

Medicare covers a good proportion of the health care expenses of seniors age 65 and above. While the government program has contributed to significant declines in mortality and life expectancy for seniors, it also involves high cost-sharing and no limit on out-of-pocket costs. Many beneficiaries are unaware of this and those with multiple illnesses or grave functional limitations can end up paying thousands of dollars each year in shared costs. These costs come in diverse forms and can be influenced by various factors. Based on their individual circumstances, the costs that Medicare beneficiaries can incur include the premium, deductible, copayment, coinsurance, and annual out-of-pocket costs.

According to a report in The Economist, Medicare processes 1.2 billion medical claims each year, with a total value of $600 billion. Many of these payments are legitimate, but a portion is fraudulent – up to a third, according to consulting firm Deloitte. Improper medical billing practices are responsible for Medicare beneficiaries paying much more than legitimate out-of-pocket costs. Payments made to the wrong person, in the wrong amount, or with invalid documentation, are considered “improper”. According to the report, simple errors such as double billing, up-coding, billing for unnecessary services, or billing for services and medications that were never provided to the patient have led to waste in Medicare spending of up to $40 billion each year.

Why does Medicare overpay? There are many reasons for this:

  • Medicare is one of the fastest in the industry to process claims. To ensure patients receive timely treatment, both Medicare and Medicaid are required to pay healthcare providers within 30 days.
  • With the large volume of transactions they handle, the focus of these public agencies is on speed, efficiency and cost rather than accuracy.
  • As a result, fraudulent claims often go unnoticed. The Economist notes that in 2016, up to $96 billion were spent on services that were not provided, were unnecessary, or were otherwise flawed.
  • CMS currently only requires 0.5 percent of provider Medicare claims to be scrutinized for billing accuracy. This means that the up to 99.5 percent of Medicare claims submitted by providers are approved without a proper review for accuracy, or any comparison to the patient’s actual medical record.

Medicare billing errors and spiraling out-of-pocket health care costs and premiums are putting seniors at significant financial risk, especially low-income individuals. Further, beneficiaries’ financial responsibilities will increase with the Medicare coverage cuts that are expected to go into effect in 2029.Improper Medicare Billing

Industry experts stress that both physicians and the government should take concrete measures to address the problem of high Medicare beneficiary out-of-pocket costs. For physicians, the best option would be to partner with a reliable third party billing service provider. A responsible medical billing company will scrutinize all claims before they are submitted, thereby preventing erroneous billing practices.

Increased Medicare billing oversight by Congress and the Department of Health & Human Services (HHS) is the need of the hour. As The Hill notes, this will provide beneficiaries greater financial protection against improper billing program and improve solvency exponentially by recovering nearly $40 billion in improper Medicare payments each year. The report recommends:

  • Best practices for oversight within the private insurance industry by the Recovery Audit Contractor (RAC) Program to review post-payment Medicare claims, identify billing errors, and return those mis-billed funds back to the program.
  • Review of more than 0.5 percent of Medicare claims by the RAC to prevent over billing and wasteful spending.
  • Authorization of a permanent RAC prepayment review program by Congress to detect medical billing errors and correct them before claims approval and beneficiary billing.

Reliable medical billing and coding companies have established practices in place for effectively monitoring compliance and ensuring the submission of accurate Medicare and private insurance claims. Their revenue cycle management process will keep claims moving smoothly through the practice’s system out to the payer. Outsourcing medical billing to an efficient company will assure accurate and reliable billing, protect Medicare beneficiaries from unnecessary out-of-pocket costs, increase practice cash flow, and reduce the risk of RAC audits.