Medicare OK Found Less Often Here : Health: Study shows service is denied at far higher rates in Southland than in northern part of state. O.C. doctor says discrepancy has long been known to medical community.

Medicare claims for services ranging from ambulance rides to mammograms are denied at far higher rates in Southern California than in the northern part of the state, according to an investigation by the General Accounting Office.

As a result, Medicare beneficiaries or their doctors in seven counties--Orange, Los Angeles, Ventura, Santa Barbara, San Luis Obispo, Imperial and San Diego--are required to pay higher out-of-pocket expenses than their northern neighbors because Transamerica Occidental Life Insurance rejects claims more frequently than Blue Shield, which handles Medicare bills for the rest of California.

“Medicare is supposed to be a federal program under which seniors receive uniform benefits, but it is in fact a crazy quilt of separate and dramatically different programs run by 34 private insurance companies,” Rep. Ron Wyden (D-Ore.), who requested the GAO study, said Monday.

“You have a situation where people are covered based more on where they live than on their medical needs,” said Wyden, who will conduct hearings on the issue today.

Dr. Robert McCauley, an internist in Anaheim whose practice consists of about 30% Medicare patients, said the discrepancy of Medicare reimbursement depending on geography has long been known to the medical community.

“It would be surprising to me if you said Medicare reimbursement was uniform across the state,” he said.

Although the GAO report found wide discrepancies in coverage nationwide, the largest occurred in California. The report offered no explanation for the differences.

Calling the GAO findings “shocking,” Wyden said that the variation in benefits raises doubts about the ability of the government to deliver a national package of health benefits as proposed by President Clinton.

“Just because you legislate a national standard benefit doesn’t mean all Americans will get the same kind of coverage,” said Wyden, who has been a strong proponent of health care reform.

In a statement, Transamerica Occidental defended the company’s practices, saying that guidelines for screening claims were prepared “within the policies set by the Health Care Financing Administration, to prevent the over-utilization of certain diagnostic services.”

Transamerica Occidental said that it has developed a superior system for screening out tests and procedures not covered by Medicare.

Spokeswoman Debra Newton said that the company could not comment specifically on the wide variation between its payments and Blue Shield’s because it did not know the other company’s criteria.

If a claim is rejected by Medicare, a doctor is financially responsible and will not be reimbursed for his or her services. If a patient has signed a statement in advance recognizing that a treatment might not be covered, the patient must pay the bill.

More and more doctors are asking their patients to sign the statements before they perform expensive procedures, such as treadmill tests to detect heart problems. “If you get turned down again and again, you learn to protect yourself,” said a Los Angeles cardiologist, who asked not to be identified by name.

“We’re certainly concerned about the significant variation between insurance carriers--there should be national standards,” said Geraldine Dallek, executive director of the Center for Health Care Rights, a Los Angeles advocacy group for Medicare recipients. She expressed particular concern about the handling of claims for mammograms.

The GAO said that Transamerica Occidental rejected 54 requests per 1,000 in Southern California, compared with a rejection rate of less than one per 1,000 in the north.

The rejection rate for routine electrocardiograms was 1 per 1,000 in the north and 8 for each 1,000 in the south, according to the GAO report, which will be released today. For ambulance service with basic life support, the rejection rate was less than 1 per 1,000 in the north and 20 per 1,000 in the south.

The GAO said that the variations were far greater than could be explained by a statistical quirk. The study covered a sampling of claims under Medicare’s Part B, which pays for doctors’ services, and analyzed those denied strictly on the grounds of medical necessity.

Medicare “is a national program under which beneficiaries should not receive different benefits solely because their place of residence differs,” according to testimony scheduled for delivery at today’s congressional hearing by Assistant Comptroller General Eleanor Chelimsky.

The medical profession also expressed surprise at the GAO findings.

“I don’t have any theories off the top of my head to explain the large discrepancies” between Northern and Southern California, said Bob Holt, director of professional relations for the Los Angeles County Medical Assn. “I just don’t know. I wish I had a good answer.”

Although Medicare is a program of federal benefits for 32 million persons over 65 and 3 million disabled Americans of all ages, the bookkeeping is performed by private insurance companies. They handle the claims and reimbursements as contractors. In fiscal 1992, the government paid $52.8 million for the processing of Part B claims in Northern California and $54.6 million for the seven southern counties.

Federal officials said that Transamerica Occidental and Southern California doctors should review the findings.

“We expect the Medicare contractors to analyze the local data to see where there are problems with billing and to work with the local medical community to see if there are areas that need addressing,” said Carol Walton, director of Medicare operations for the Health Care Financing Administration.

“Quite frankly, when you have 700 million claims, we do not have the resources to look at each one,” Walton said.

Variations can be caused by differences in such factors as medical practice, the local population of patients, fraud and differences in billing practices, she said.

However, she could offer no specific explanation for the range of differences between two insurance companies covering a single state. On the mammogram issue, she said, it is possible that Southern California doctors had been using incorrect code numbers in submitting their bills to Medicare.

Blue Shield and Transamerica Occidental each handled about 25 million claims in fiscal 1992, the period covered by the GAO study.

The GAO study of Part B claims included physician services, ambulances, diagnostic laboratory tests, home health services and equipment, as well as charges for outpatient care at hospitals.

The GAO looked at denial rates for the 71 most common services processed by six insurance carriers in five states: California, North Carolina, South Carolina, Illinois and Wisconsin. Government investigators found “sizable differences” in denial rates, according to the GAO.

The overall rejection rate for payment, covering all 71 services, was highest in Southern California, 23.1 per 1,000 claims, compared with 4.4 in Northern California, 4 in North Carolina, 1.4 in South Carolina, 14.1 in Illinois and 12 in Wisconsin.

Times staff writer Leslie Berkman contributed to this report.