WASHINGTON -- The federal government is losing as much as $500 million a year by paying thousands of medical bills for the elderly that private insurance companies should be paying, a Senate subcommittee was told yesterday.
And there is a backlog of more than $1 billion paid out by Medicare that the government should try to recover from the private insurers, witnesses said.
"We're not talking about chicken feed," Sen. William V. Roth Jr., a Delaware Republican, commented.
Sen. Joseph I. Lieberman, chairman of the Subcommittee on Regulation and Government Information of the Senate Governmental Affairs Committee, said, "There is no magic bullet" for eliminating erroneous payments, "but there is a serious problem."
For years, the Health Care Financing Administration, which administers Medicare, has been trying to come to grips with the problem.
The erroneous payments cover medical bills for people over 65 who are eligible for Medicare but also are covered by private insurance, generally through an employer for whom they or their spouses work. In such cases, the private insurer is supposed to pay the medical bills. In some of those cases, Medicare then pays for what the private insurer refuses to cover.
The Health Care Financing Administration, headquartered in Woodlawn, hires insurance companies to process its Medicare claims. In Maryland, Blue Cross/Blue Shield of Maryland, the state's largest health insurer, handles hospital bills for Medicare while Pennsylvania Blue Shield handles doctors' bills.
The erroneous payments are made when the insurance company handling Medicare claims does not know that an elderly patient has private insurance. Medicare relies on the patient and the hospital or doctor for that information, which often is not provided.
There is no incentive for an insurance company that processes Medicare claims to check its own records to see if a claimant is one of its subscribers, since that would mean that it has to foot the bill.
An official of the General Accounting Office, Leslie G. Aronovitz, said efforts to determine if claimants had private insurance "may be hampered by a conflict of interest on the part of contractors. In many instances, it is the private insurance business of the contractor that is the primary payer for claims" filed by Medicare recipients.
