GAO says private plans overcharged Medicare $59 millions, Feds did nothing, auditing abandoned?

Audit Cites Overpaid Medicare Insurers

New York Times, Sept 10, 2007

WASHINGTON, Sept. 9 — Private insurance companies participating in Medicare have been allowed to keep tens of millions of dollars that should have gone to consumers, and the Bush administration did not properly audit the companies or try to recover money paid in error, Congressional investigators say in a new report.

The investigators, from the Government Accountability Office, said the money could have been used to reduce premiums or provide additional benefits to older Americans.

Under federal law, Medicare officials are supposed to audit the financial records of at least one-third of the insurance companies each year. But the investigators said the Bush administration had fallen far short of that goal and had never met the “statutory requirement.”

Indeed, they said, the proportion of companies audited by Medicare declined steadily — to 14 percent in 2006 from 24 percent in 2001 — despite a steady growth in Medicare payments to the plans. Those payments now total $75 billion a year, about one-fifth of all Medicare spending.

The Bush administration did not take issue with the findings.

“We welcome constructive suggestions for improving the audit process,” said Tim Hill, chief financial officer at the Centers for Medicare and Medicaid Services. An agency spokesman said it might need additional legislative authority to clarify its power to recoup money from insurers.

Administration officials have strongly encouraged insurance companies to participate in Medicare and have urged beneficiaries to enroll in private plans. Some plans, known as Medicare Advantage plans, cover a wide range of services, including doctor’s visits and hospital care. Others provide only prescription drug benefits.

The purpose of the audits is to determine whether insurers correctly calculated their costs and premiums and delivered the services promised to Medicare beneficiaries. Insurers typically receive fixed monthly payments, set in advance, for serving Medicare patients. Drug plans can receive extra payments if their costs exceed their expectations.

Likewise, if private plans hold down costs, they are supposed to share some of the savings with beneficiaries and the government.

In 2003, Medicare audited 49 of the 220 organizations participating in the program. Auditors found significant errors at 41 companies, but Medicare officials took no action on the findings. As a result of the errors, the auditors said, insurers kept “$59 million that beneficiaries could have received in additional benefits, lower co-payments or lower premiums.” The report did not identify the companies.

Paul Caban, assistant director of the financial management team at the Government Accountability Office, said the Medicare agency’s response was puzzling. “What is the value of conducting these audits if you do not act on the findings?” Mr. Caban asked.

Two influential members of Congress expressed dismay.

“Congress required audits for good reason,” said Senator Charles E. Grassley of Iowa, the senior Republican on the Finance Committee. “There’s a lot of taxpayer money being spent, and we need to know where it goes. We also need consequences for spending that isn’t proven to serve beneficiaries.”

Mr. Grassley said Medicare officials had done “a poor job of bringing accountability here,” and he added, “I want to see concrete action to fix this.”

Representative Pete Stark, the California Democrat who is chairman of the Ways and Means Subcommittee on Health, said the Medicare agency “is not doing its job to protect beneficiaries.”

In separate action, the Bush administration is vigorously pursuing money that it says is owed to insurance companies by Medicare beneficiaries. The Medicare agency has sent letters to more than 135,000 people saying they still owe premiums for prescription drug coverage provided in 2006. In most cases, the premiums were supposed to have been withheld from monthly Social Security checks, but the government withheld the wrong amounts or nothing at all.

Kerry Weems, acting administrator of the Centers for Medicare and Medicaid Services, said, “I am intently focused on this matter and will make it a priority to correct the errors and minimize them in the future.”

Insurers submit bids to Medicare each year, saying how much they expect to be paid to provide specified benefits. If the government accepts these proposals, it signs contracts with the insurers.

The Medicare agency contends that it does not have the legal authority to force insurers to return money to beneficiaries or to the Medicare trust fund when auditors find “errors, incorrect or unreasonable assumptions or other misstatements” in company bids.

The Government Accountability Office insisted that Medicare officials “had the authority to pursue financial recoveries,” but did not use it.

Medicare hires private firms to conduct many audits. Insurers said that in many cases the auditors were not well versed in the intricacies of Medicare. Moreover, they said, Medicare has not provided clear guidance on how to define important items like administrative costs.

Medicare officials said they found significant errors in bids from 18 of the 80 organizations audited last year. But the Government Accountability Office said “there is a low probability of the audits identifying intentional misrepresentations,” because Medicare relies heavily on actuaries who prepare the bids to certify their accuracy.

Under a 2001 law, every federal agency is supposed to have a program for “recovering any amounts erroneously paid to contractors.”

The Bush administration told the Government Accountability Office that “general federal contract laws do not apply to the payments made under Medicare contracts.”

See Gray Panther video “Privatize Medicare? No Way!”

Legislative hired guns argue that overpayments to private Medicare plan improves healthcare for poor and minorities. New Medicare Rights Center study proves this a lie. Moreover, in some cases, private plans cost more in poor areas than the same plan in nearby rich areas.

1 Response to “GAO says private plans overcharged Medicare $59 millions, Feds did nothing, auditing abandoned?”

  1. 1 Anita Feldman December 30, 2008 at 3:26 pm

    I am writing you about a problem arising, I think, from the current administration’s contracting of Medicare claim administration to private insurers. Because of the inefficiency this policy has caused, I have now paid some $4,000, over the past year and a half, for health services (psychotherapy by a licensed Certified Social Worker) that should have been covered and reimbursed to me by Medicare and by my AARP Medigap Insurer, United Health Care.

    In the past, these claims were usually paid promptly, within six weeks after the forms were mailed to a designated Medicare office in Crompton, New York. More recently, however, claim forms were submitted several times by certified mail (with a record of delivery), to other designated offices, most recently one in Syracuse, New York, but the half of the charges for which Medicare normally paid was neither paid nor rejected by Medicare, and the claims were not sent to United Health Care for payment of the other half of the charges, which United Health Care normally paid. When inquiries were made by telephone, Medicare representatives said that the claims were now handled by contractors, and the call (made by the LCSW) was forwarded to the office of the contractor, the contractor’s representative said that new rules and codes required the claim forms to be filled in differently. When, following these new rules and codes, new claim forms were submitted, however, nothing happened. and when the offices involved were contacted by phone again, after several months, the representative of the contracting company said that the forms were not processed because they were not correctly filled out. Another set of forms–the third, by then– was then submitted, in May, 2008, and again nothing happened. In August and September 2008, in response to other phone calls, the LCSW was told again that the forms had not been filled out correctly. A new group of forms–four in all–were filled out, following the instructions given to the LCSW over the phone, and they were sent on October 2 by certified mail to the Syracuse office, where, according to online post-office tracking, they were received on October 6. On November 10, I received a check for $214, covering the Medicare half of the payment covered in one claim form. The Medicare form that came with the check said that the AARP insurer had been notified of the claim and would pay the other half of the benefits to the LCSW directly. The address of the LCSW had meanwhile changed, however, and, though the new address was shown on all the forms that the LCSW submitted on October 2, the address that the Medicare contractor gave to the AARP insurer, apparently, was the former address, not the new one.

    I called the Medicare office, was forwarded to the contractor’s office, and was told that, in order for the new address to enter the records the LCSW had to specifically notify Medicare, in a separate communication, that the address had changed. I was also told that one of the four claim forms submitted on October 2 had been rejected because it lacked the proper information. When I examined a photocopy I had made of the other claim forms, including the one that I was told had been rejected, it appeared to me that the identifying information on all of them was identical with that on the claim that had been paid, but the representative I spoke to said that this was not so. He could not tell me how the rejected claim was different from the one that was paid, he said, but he could give the LCSW this information, and I passed the information øn to the LCSW, asking him to contact the contractor. By late November, the AARP insurer’s check, which had been misdirected to the LCSW’s old address, was finally forwarded to the new address by the Post Office, endorsed to me by the LCSW, and cashed by me. I continued to expect the notice of rejection but instead, on December 15, I received a check from Medicare for $215, with a notice that I had been paid an extra dollar as interest because of the lateness of the payment. The notice I received, however, still listed the LCSW’s old address, not the new one, so it seems that the AARP check will be delayed, since it was apparently sent to the old address and will have to be forwarded by the post office to the new one.

    Though two of the claim forms submitted on October 2 have been fully or partially paid, I still have received no word about the other two claim forms that were submitted on that date. On December 18, however, the LCSW, at my request, sent another four claim forms to the Medicare office in Syracuse by certified mail. (I asked him to do this because time was passing and I did not want the forms to be rejected for lateness.)I hope that some of them, at least, will be paid.

    I think you will agree that the contractor’s administration of these claims has been extremely inefficient, not to say obstructive. Because of the delay in payment, I have had to live more frugally than usual in the past year or so. I continue to work part-time,as I have for the past three years, but the anxiety caused by this still-unsolved problem has affected my health and ability to work. (I am now 78, and I teach expository writing in an adult-degree program at a local university.) I don’t know quite where to turn for help at this point, though I’m considering getting in touch with my U.S. Senator or perhaps with my representative in the state legislature. I’d be grateful for any advice or help you can give me.

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