Medicare Overpays Billions

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Medicare spent $6.7 billion too much for office visits and other patient evaluations in 2010, according to a new report from the inspector general of the U.S. Department of Health and Human Services.

But in its reply to the findings, the Centers for Medicare and Medicaid Services, which runs Medicare, said it doesn’t plan to review the billings of doctors, who almost always charge for the most-expensive visits, because it isn’t cost effective to do so.

The inspector general’s report, released this month, estimates that overpayments account for 21 percent of the $32.3 billion spent on evaluation and management (E&M) services in 2010. The E&M category includes office visits, emergency room assessments and inpatient hospital evaluations.

This is the second time that the inspector general has singled out this area for more scrutiny.  In 2012, the watchdog said physicians had increasingly billed Medicare for more intense — and more expensive — office visits over time. But that didn’t prove the claims were improper.

The natural question that comes out of this is: Are these physicians billing appropriately?” said Dwayne Grant, regional inspector general for evaluation and inspections in the Atlanta region, who oversaw the new report. “We don’t want to pay them too much but we don’t want to pay them too little either.”

For this review, the inspector general gathered the medical records associated with 657 Medicare claims and asked professional coders to see whether the records justified the rates charged.

Overall, more than half of the claims were billed at the wrong rate or lacked documentation to justify the service. Sometimes physicians billed for a lower-cost service than the one they delivered, but more often they billed for a higher-cost one. The inspector general extrapolated from its sample to estimate the amount Medicare overpaid on all 2010 E&M claims.

“We have to do a better job of curbing improper payments and protecting taxpayer dollars,” Sen. Bill Nelson (D-Florida), chairman of the U.S. Senate Special Committee on Aging, said in a statement.

The inspector general’s findings complement a recent review by ProPublica of data recently released by Medicare on payments to individual health professionals for services in its Part B program. We found that in 2012, more than 1,800 doctors and other health professionals almost exclusively billed Medicare for the most complicated and expensive office visits for their established patients.

Office visits are the most common services provided in the program.

While most providers had a tiny percentage of visits for which they charged the highest rate, known as level 5, more than 1,200 billed exclusively at that level. Another 600 did it more than 90 percent of the time. About 20,000 health professionals billed only at the top two levels, 4 and 5.

Experts we consulted said that these billing patterns were highly implausible and could indicate fraud. Some doctors, however, said that their patients were sicker than those of their peers and required more time and attention.

ProPublica also launched a new tool called Treatment Tracker that lets users look up their doctors and see how they compare to peers on office visits and other measures.

 In its report, the inspector general’s office recommended that CMS educate doctors about proper billing practices. It also suggested that Medicare pursue doctors who consistently billed for higher-level services than they actually delivered, a practice known as upcoding.

While CMS agreed with the need for education, it disagreed with the recommendation to review the physicians’ billings. It said one of its contractors recently reviewed 5,200 medical claims of high-coding physicians and the process cost more money than it caught in overpayments.

CMS said a second phase of the review — of 13,500 claims — was nearing completion. “Based on the results of this effort, CMS will reassess the effectiveness of reviewing claims for high-coding physicians” versus other efforts, such as sending these doctors reports that compare their billings to their peers.

Grant, of the inspector general’s Atlanta office, said that while the individual E&M services do not cost much, they add up — and that if CMS declares that it won’t review outliers, it could send the wrong message.

“The challenge that CMS is trying to figure out is what is the best way to accomplish this,” Grant said. “We see the advantage of continuing to look at these high billers. Not only are they billing high now; it could have an impact on future billings … This is not just free rein to bill whatever you want.”



So What’s The Big Secret?

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If you needed assistance with the activities of daily living, for example, eating or dressing, who would help you, would you be able to afford the cost of care? And, if you are thinking this is about long-term care insurance better take a look at this affordable alternative.

Here’s something that’s really been around for a quite a while, with its many characteristic qualities of long-term care insurance, that you may or may not have learned about or are aware.

One of the most common statements about long-term care insurance (LTCi) is “just can’t afford it.” But perhaps ask yourself, does “just can’t afford it” mean the cost of today’s premiums or that the cost of future care is unaffordable?

Whether or not an individual can or can’t afford long-term care insurance or whether an individual chooses not to buy coverage is a realistic factor.  And, many times an individual is left with feeling that the only affordable alternatives are:  1) wait and try to qualify for the government welfare program called Medicaid or 2) believe in the false notion that Medicare, an individual/family or a group health plan will take care of the bills.

So, what is the affordable alternative to long-term care insurance? How can a person reduce the risk and protect themselves from calamities?  It’s very simply, short-term recovery care insurance. It provides a bridge to help handle the needs of today and prepare for the uncertainty of tomorrow.

Read about what happened to Jane and Mary:

Jane is a healthy 43 year old who has saved $10,000 to use as a down payment on her dream home. Jane loves hiking and is always looking for more challenging trails to conquer. One day, while hiking a new trail, she loses her footing and falls several yards down a gorge. Her entire left side is severely injured, but with physical therapy, her doctors expect her to fully recover within six months. Jane is quickly discharged from the hospital and is now at home and needs help dressing, bathing, getting around the house, and getting to and from physical therapy while her husband is at work. Jane opts to hire a home health aide 10 hours a day, 5 days a week, at an expense of approximately $21 an hour, or $1,050 a week. This quickly adds up to over $25,000 during her six month recovery period. Fast forward to Jane’s recovery, she now has no savings to put toward her dream home and owes more than $15,000 in recovery costs. For around $45 a month, a short-term care recovery insurance policy would have covered the majority of her recovery expenses.

Mary is a 68 year old widow whose children live out of state. She had always been able to depend on her family for help, so when she was approached about long term care insurance years ago, she decided not to apply. Now, Mary finds herself unprepared for an accident or illness that could leave her needing some help getting through the day, even for a limited period of time. She doesn’t want to burden her family, doesn’t have an LTCi policy in place to help her with the expense of hiring someone, and purchasing an LTCi policy today is simply not in her budget. Short-term recovery care insurance may be the answer for Mary. For a very affordable premium, Mary can purchase an appropriate amount of coverage with this plan. It could cover her care expenses, giving her time to adjust to her situation and reach out to her support network during recovery without being a burden to her family.

Short-term recovery care insurance is designed to cover licensed home care, assisted living or nursing facility, and adult day care. Doesn’t this sound similar to long-term care insurance?

Here are some comparisons:

Short-term recovery care insurance can provide care for one (1) year or less; long-term care insurance provides care for one (1) year or longer. However, statistics show that most people will need this type of care for less than one (1) year.

Short-term recovery care insurance has a benefit period selection of up to 360 days with possible restoration of days to extend the benefit period; long-term care insurance has a benefit period selection of more than 360 days. Generally, more than 360 days is necessary for Alzheimer’s, Parkinson’s, etc.

The basic premise of short-term recovery care insurance and long-term care insurance is to cover health needs for recovery, rehabilitation, recuperation and convalescence care.

Short-term recovery care insurance is available for ages 18 to 85; long-term care insurance is available for ages 18 to 70.

What about the more common examples of a covered injury/illness or medical necessity in America?

Americans have 1.1 million heart attacks per year, most people survive and are able to return to work. However, only after a lengthy period of recovery, convalescence, or rehabilitation, which could require months.

Stroke victims are the most common example of people who need short-term recovery care insurance. They are particularly affected by lengthy recuperative and rehabilitation needs and are surviving at a greater rate, but the rate of incidence is up, particularly in the 40+ age bracket.

Hip and knee replacements are becoming quite common for patients under and over age 65. But, complications or recovery periods are also a factor in many cases.

In conclusion, short-term care recovery insurance is an affordable alternative!  What do you think?       




The Social Security Mistake

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After decades of paying into the Social Security system, many retirees are eager to start collecting that monthly check as soon as possible. But that may be a costly mistake.

While you’re allowed to start claiming Social Security benefits at age 62, holding off for several years can add thousands of dollars to your payments over a lifetime. That’s because you don’t qualify for all of your earned benefits until you reach “full retirement age,” which is 66 for most Baby Boomers and 67 for those born in 1960 or later.

So checks claimed at age 62 are about 25% smaller than if you wait until your full retirement age. And if you wait even longer, your annual benefits will grow by another 8% for each year you wait up to age 70.

For example, let’s say 61-year-old Mary, who currently earns $55,000, is deciding when to retire. If she were to file for Social Security benefits next year at 62, she would receive around $15,400 a year, according to T. Rowe Price’s Social Security benefits evaluator. If she waits until 66, however, her annual benefits would grow to around $20,500 per year. And if she is able to hold off for several more years, until age 70, her annual benefits would climb to roughly $27,100 per year.

The difference can really add up. If Mary lives to be 95 years old, claiming her benefits at age 70 would result in roughly $677,000 in cumulative Social Security benefits (in today’s dollars), compared to the $500,000 or so in benefits that she would receive if she’d filed eight years earlier.

We think for most people that’s really startling because they’ve never really thought about it,” said Christine Fahlund, a senior financial planner at T. Rowe Price. “They don’t appreciate that waiting would make such a difference.”

Still, waiting until 70, or even 66, is not for everyone. For example, you may be concerned that you won’t live long enough to reap the benefits of waiting for the larger checks. In Mary’s case, she would need to live to at least 80 before waiting until age 70 to collect Social Security which would result in greater lifetime benefits.

Another potential obstacle: Due to health issues or unemployment, you may not be able to work any longer and don’t have enough savings to tide you over.

“Just because it’s better doesn’t mean it’s necessarily going to be the best option for you,” said David Richmond, president and founder of Richmond Brothers, a Michigan-based financial advising firm. “You may not be able to afford to maximize Social Security.”

Living off credit cards to ensure a larger check is never going to be a good idea, for example.

While singles are only able to control the age at which they file for benefits, married couples (and divorced couples who were married for at least 10 years) have a variety of strategies to consider. Each married partner is typically eligible for three kinds of benefits, depending on circumstances:

  • A retired worker benefit, which are the benefits you accrue over your own working years.
  • A spousal benefit, which entitles you to half of your spouse’s benefits while he or she is still alive. If you have not hit full retirement age, you are only eligible to receive a portion of those benefits.
  • A survivor benefit, which entitles you, once you reach full retirement age, to a deceased spouse’s full benefit. If you have not hit full retirement age, you are only eligible to receive a portion of those benefits.

Couples can increase their annual benefits by coordinating when and how they file for Social Security. In many cases, for example, it makes sense for the lower-earning spouse to file first, while the higher-income earner waits as long as possible.

Not only does this strategy result in larger annual benefit checks, it also locks in a higher “survivor benefit” for the lower-earning spouse. According to Fahlund, the survivor benefit is so important that sometimes it makes sense for even a spouse with health problems to hold off on claiming benefits if he or she is the higher earner.

Couples can also consider other strategies, such as the ability to “file and suspend,” which allows one partner to receive spousal benefits while the other partner delays their annual benefits to receive a larger check.