Currently 56 million Americans rely on Medicare for healthcare coverage that provides financial protection during their senior years. Unfortunately, most are unaware that within the Medicare program there’s no ceiling on the amount of out-of-pocket costs a beneficiary could be expected to pay for covered services.
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.
Americans who have always believed their healthcare would be taken care of under their future enrollment in Medicare need to understand their responsibility for out-of-pocket healthcare costs and premiums. It’s likely that we all will need to save much more for retirement than previously planned if Medicare billing oversight and overall solvency does not improve.
Congress and the Department of Health & Human Services (HHS) must examine the impact Medicare improper payments have on beneficiary out-of-pocket costs. With increased Medicare billing oversight, beneficiaries would have greater financial protection against improper billing and program solvency would improve exponentially by infusing nearly $40 billion in improper payments back into the program each year.
The solution is simple and the oversight infrastructure needed is already proven and in place. In 2009, Congress mandated 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.
Despite opposition from providers who seek to retain over billings, the RAC Program has returned more than $10 billion in improper payments to the Medicare Trust Funds, greatly improving program solvency and correcting Medicare claims. In tandem with best practices for oversight within the private insurance industry, the RAC program should review much more than 0.5 percent of Medicare claims to prevent over billing and wasteful spending.
In addition, CMS has the opportunity to ask Congress to authorize a permanent RAC prepayment review program to catch provider billing errors and correct them before claims are approved and beneficiaries billed. The Government Accountability Office (GAO) has twice recommended Congress implement this program to ensure Medicare pays claims properly the first time, but the Department of Health and Human Services (HHS) inexplicably continues to decline to move the program forward.
Whether you are enrolled in Medicare today, or plan to do so in the future, we all must ensure Congress makes Medicare billing oversight a priority, protecting beneficiaries from unnecessary out-of-pocket costs and strengthening program solvency for the future.
We must significantly increase Recovery Audit Contractor (RAC) review of Medicare claims to dramatically reduce improper payments, infuse those billions back into the program each year, ensure that Medicare billing is reliable, accurate and ultimately, protects American seniors from an increased financial burden during their retirement.
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