Study Raises Concerns Over Handling of Medicare Claims

High school graduates with no medical training look over piles of claims--an average of one every 72 seconds--and have to decide: Should Medicare pay for this? It is the “weakest link” in the government’s health insurance program for the elderly, a congressional report says.

“No one knows for sure whether too many claims are being denied, too few, or even the right claims,” Rep. Ron Wyden (D-Ore.) said Wednesday. He had asked for the report from the General Accounting Office.

The GAO, the investigative arm of Congress, examined how hospitalization claims for Medicare are handled, focusing on the operations of four insurance companies that process the paperwork in California and the Carolinas. The examination was done in June and July.

Wyden said that he asked for the investigation after being told that when Medicare claims are denied, those decisions are reversed on appeal by a margin of 2 to 1.

While Medicare is a federal program providing health insurance for the elderly, the claims processing work has always been farmed out to private insurance companies. Nationwide there are 34 companies doing that service.

Ninety percent of the claims are resolved by computers, which kick out the remaining 10% to be reviewed by people. Nine out of 10 of those forms handled by people are reviewed by someone with no medical background, the rest by a doctor or nurse, the report said.

“The typical educational level attained by claims examiners was high school, with perhaps some college,” the GAO report said. “Given the time constraints under which these claims examiners operated, questions naturally arise concerning their ability to make reliable determinations of medical necessity.”

But the agency that oversees Medicare said the reviewers are not asked to make difficult decisions that require medical interpretation.

Joe Razes, a program operations specialist for the Health Care Financing Administration, said the reviewers ensure that the medical procedures on the claims are covered by Medicare and that they are performed by doctors from appropriate specialties.