Health Care Finance

Published by: cfz 2009-01-08

I would like to gather credible sources of information that support the following hypothesis: Payers (Health Insurance Companies, HMOs and Managed Care Organizations) lose millions of dollars each year due to paying heath care claims incorrectly (due to people, process and technology issues surrounding the administration of contracts with physicians and providers)

Hello kms, Interesting question. Thanks for asking. I searched for - health care losses incorrect claims - and found the following: And article at http://www.osc.state.ny.us/press/releases/sept00/92500.htm entitled "McCall Audits Result in Recovery of $42 Million in Misspent Medicaid Dollars, But Problems Remain" shows the following: "More than $42 million of $90.5 million in incorrect Medicaid payments identified in previous McCall audits has been recovered by the Department of Health (DOH). However, millions of Medicaid dollars continue to be misspent because of uncorrected weaknesses in DOH’s computer billing system, according to audits and reports released today by State Comptroller H. Carl McCall... ...McCall’s annual on-going audit of the MMIS system identified $32 million in improper Medicaid payments to providers in FY 1999-2000. The majority of errors were for inpatient hospital care that had already been paid or was not billable to Medicaid. Nearly $9 million was recouped during the audit process, and McCall urged DOH officials to work to recover the remaining $23 million. Auditors also prevented millions of dollars in additional overpayments when they spotted a clerical error in which a DOH rate change for hospital daily rehabilitation costs was listed as $11,106, rather than $1,863. DOH corrected the error. " There is more detail and backup information at this page. An interesting report by the United States General Accounting Office - The Honorable Charles E. Grassley,Ranking Minority Member,Committee on Finance,U.S. Senate says in part: "In addition to losses due to fraud, the Department of Health and HumanServices' OIG has reported that billing errors, or mistakes, made by healthcare providers were significant contributors to improperly paid health care insurance claims. The OIG defined billing errors as (1) providing insufficient or no documentation, (2) reporting incorrect codes for medical services and procedures performed, and (3) billing for services that are not medically necessary or that are not covered. For fiscal year 2000, the OIG reported that an estimated $11.9 billion in improper payments were made for Medicare claims." This report is available here: www.gao.gov/new.items/d01818.pdf Trying to narrow the search down to more specific studies or reports, I searched healthcare OR hmo OR provider +losses +error OR incorrect +forms OR claims . Included in the results were the following: A report by the Honorable June Gibbs Brown, Inspector General, U.S. Department of Health and Human Services, in Testimony Before the Sucommittee on Health of the House Committee on Ways and Means on July 17, 1997 says in part: "In view of Medicare's 38 million beneficiaries, 800 million claims processed and paid annually, complex reimbursement rules, decentralized operations, and health care consumers who may not be alert to improper charges, the Medicare program is inherently at high risk for payment errors. Medicare, like other insurers, makes payments based on a standard claims form. Providers typically bill Medicare using standard procedure codes without submitting detailed supporting medical records. However, Medicare regulations specifically require providers to retain supporting documentation and to make it available upon request. Because of the high risk in health insurance reimbursement and its dollar magnitude in relation to financial statement impact, i.e., $168.6 billion in Medicare fee-for-service claims, we embarked on a comprehensive review of claims expenditures and supporting medical records... We estimate that during FY 1996 net overpayments totaled about $23.2 billion nationwide, or about 14 percent of total Medicare fee-for-service benefit payments. These improper payments could range from inadvertent mistakes to outright fraud and abuse. We cannot quantify what portion of the error rate is attributable to fraud. Specifically, 99 percent of the improper payments were detected through medical record reviews coordinated by the Office of Inspector General (OIG) in conjunction with medical personnel. When these claims had been submitted for payment to Medicare contractors, they contained no visible errors." This report is available at http://waysandmeans.house.gov/health/105cong/7-17-97/7-17brow.htm In a report by a law firm, Damon and Morey at http://www.damonmorey.com/pubs/winter2000.html on disclosure and health law says in part: "Billing errors, overpayments and misconduct can occur in any health care organization. Historically, such problems were ignored by the health care organization, or worse, covered up. Ignorance of disclosure issues and non-disclosure of possible violations are not wise in light of the government's current anti-fraud efforts. Health care managers are receiving more reports of billing and reimbursement problems as the government increases its scrutiny." Further searching for - health insurer OR provider incorrect paid claims -fraud - uncovered the following sites: Cost Cutting Analysts at http://www.costcuttinganalysts.com/audit/health.htm claim: "Health Insurance Claims Review CCA's program is specifically targeted to self-insured plans; third party administered plans; HMO's and other managed care plans. Our focus is payment errors and the pursuit of full recovery of claim overpayments. As reported by the American Health Information Management Association; "... this is a problem that results in annual payments of more than $20 billion in incorrect claims." Adding overpayment to my search terms found: Physician's New Digest at http://www.physiciansnews.com/law/502artz.html discusses the problem of billing and provider misidentification: "Provider misidentification has become the subject of federal enforcement actions. The FBI and Department of Justice have launched investigations, Medicare Carriers have made overpayment refund demands and commercial third party payors have imposed sanctions as a result of provider misidentification. Provider Misidentification Problem A remarkable number of health care practices across various specialties and professions (in many jurisdictions) bill for services under one doctor's name and identification number when another doctor actually rendered the services. This practice, whether inadvertent or intentional, is not correct." They go on to show that financial loss is possible under these circumstances: "If, however, the payor is a gatekeeper managed care organization or HMO, which has strict credentialing requirements limiting the number of providers who can participate and the product has no out of network benefits, misidentification of the provider who actually rendered the services results in reimbursement that neither the doctor nor the patient were authorized to receive." The Rational Observer discusses insurance company scams related to billing errors and losses at http://www.rationalobserver.com/insurscam.htm and says in part: "...using non-medical examiners to evaluate and validate medical claims reduces insurance costs. Further by creating duplicate billing through the insurance company computer systems, insurance companies can now make it appear as if providers were defrauding the insurance company. An additional benefit for these companies is that this procedure allows the insurance company to report a continuing increased loss in income to the state insurance commissioners. Thereby, getting their requests for state insurance waivers looked upon in a more favorable light." An interesting view on a possible cause of these problems. I hope the information above will serve as credible sources for you and show that large losses are incured by health insurers due to computer and human error. Do ask for clarification if any of the above is unclear. Best regards, -=clouseau=-

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