Insurers profit as Medicare wrongly picks up bill, panel hears

April 03, 1993|By John B. O'Donnell | John B. O'Donnell,Washington Bureau

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.

Carol J. Walton, director of the Health Care Financing Administration's Bureau of Program Operations, said her agency was authorized by Congress four years ago to obtain information from the Social Security Administration and the Internal Revenue Service on Medicare beneficiaries. Using that, it has been able to identify payments that insurance companies should have made. Since December, it has demanded reimbursement of $270 million from insurance companies for erroneous payments that date back as far as 10 years.

A lawyer for the Travelers companies, a private insurer that also doesa substantial business as a Medicare contractor, said his company recently received more than 2,000 "reimbursement demands."

One was for five claims totaling $104.28. The cost of processing the claim "will probably exceed the $100 that is demanded of us," James Michener said.

Senator Lieberman, a Connecticut Democrat, cited a New York State demonstration program as a guide to developing a solution. New York developed a computer network that ties together the subscriber data bases of private insurers so that information on patients' insurance can be checked at the time patients are filling out Medicare claim forms.

Linda Ryan, director of the program, said the network had enabled New York to avoid the "very costly" task of building its own data base.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.