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By EDITH EDELSON, chairperson

HEALTH/WELFARE TASK FORCE
NJ FEDERATION OF SENIOR CITIZENS

PROBLEMS WITH MEDICARE B

Medicare, originally enacted to reduce medical costs for the public, has instead proven to be a bonanza for providers, so that consumers pay more for medical services today than they did before Medicare was enacted.

One reason for this is the provision in the Medicare law assuring providers that there would be no interference with their fees. Thus there is no negotiation of fees as there is between Blue Cross/ Shield and providers. Nor are doctors mandated to accept Medicare reimbursement as the full payment.

IT IS URGENT THAT THIS PROVISION BE REPEALED.

Another problem with Medicare reimbursement is the law provision that the "reasonable" charge shall be the lowest of the actual charge, the customary charge and the prevailing charge. The prevailing charge is capped by an "economic index" which by law is based on outdated data. The source of these charges and the methodology are determined by the Secretary of HHS and the carrier (Prudential in New Jersey). Data used are not only outdated but also inaccurate and even inappropriate.

The result is that Medicare covers only about 40% of the medical costs to the consumer, and only about 20% of physicians in New Jersey accept Medicare on assignment (i.e., as complete payment). Also, there is under-utilization of medical services resulting in many cases in acute illness, deterioration of chronic illnesses, hospitalization or institutionalization the most expensive forms of medical care.

THE LAW SHOULD BE CHANGED SO A MORE REALISTIC
FORMULA THAN "REASONABLE CHARGE" WOULD BE USED

AS A BASIS FOR REIMBURSEMENT.

THE PRESIDENT'S MEDICARE PROPOSALS

The President has proposed a cut of more than $1.8 billion in Medicare for Fiscal Year '84. Almost all of these cuts would increase the cost-sharing by patients.

Hospital copayments The proposal to eliminate the present copays on hospital stays in excess of 60 days while imposing copays for stays from the 2nd to the 60th day helps 2% of the patients but creates a great hardship for 98% of them. with an average stay of 11 days, the 98% would pay an extra average of $280, which would

go as high as $1179 for some. These copays are scheduled to increase annually as first day deductibles increase. These copays would be an intolerable burden which many could not possibly pay. There would be an increase in bad debts that would burden hospitals and insurance companie as well as the patients.

Medicare premiums and deductibles would be increased. By 1988 the Medicare B premiums would be as high as 35% of the Medicare B costs. Many seniors could not afford this, nor would they be able to afford Medi-gap insurance that would cover these increases. Payments to physicians would be frozen at the '83 level for one year; this would not really create any hardship for doctors only for the patients since they would be obliged to make up the difference between Medicare's reimbursement and the doctor's charge; fewer doctors would be willing to take Medicare on assignment; many would raise their fees, and patients would postpone visits to the doctor. The result in many cases would be hospitalization. Vouchers Medicare beneficiaries would be able to buy private health insurance instead of being covered by Medicare beginning in 1985 through the use of vouchers valued at 95% of the average payment to beneficiaries. Very likely the insurance companies would exclude the very sick, resulting in a higher per/person cost to Medicare.

All of the above proposals would endanger the health of the retired and disabled people, and might even prove to be more costly to government in the long run.

Our difficulties under Medicare point to the need for a National Health Program for all.

ooooo

Attached is an analysis of the problems with the reimbursement under Medicare B as well as suggested remedies.

.

SYNOPSIS OF PROBLEMS WITH MEDICARE REIMBURSEMENT

12/6/81
By law, reimbursement is based on a "reasonable fee," based on the lowest of the actual charge
for a service, the customary charge for such service throughout the year by the doctor, or the
prevailing charge which is 75% of the customary charge for similar services by all doctors in the
locality. But the annual increase in the prevailing charge is limited by an economic index.

The Secretary is the one who determines the reasonable charge.
Medicare beneficiaries pay nearly 70% of the doctor's bills themselves; Medicare pays about 30%.

Individuals who are under-reimbursed should file an appeal for a fair
bearing.

and other problems
The underreimbursement /result from the following:
1) an laproper mix of doctors and of charges considered.
2) data that by statute is į to 2 years old and so does not reflect the current inflated charges.
3) The way the economic index 18 calculated does not reflect the actual health are cost inflation

rate.

20

The law should be changed to eliminate the reasonable charge in favor of a uniform national fee schedule adjusted for geographic cost-of-living and differences in the cost of medical practices.

in New Jersey 4) Only about some of the doctors accept assignment; 1.6., agree to accept the "reasonable charge" as their full charge to Medicare patients.

The law provision that there will be no interference with the fees of the doctor's charge should be eliminated. It should be mandatory for doctors

to accept assignment. Hospitals under Medicare and Medicaid could enforce this.

Statos could make it a condition for licensing physicians.
5) Many reports are filed with incorrect or incomplete information by the doctor.

HCPA and carrier should provide specific instructions and specific standards.

HCFA should provide a nominal fee for doctors to cover the paperwork. 6) Some doctors refuse to 1111 out Pt. II until patient pays them.

This should be prohibited by law as in Florida. 7) Patients' notices, "This is not a Bill" fail to explain the basis of Reasonable Charge deter

nination and the data used to compute the reasonable charge.

.

Medicare booklet should explain this and also how assignment works

It should make reference to Legal Sorvices for help in filing an appeal. 8) To determine similar services as part of "reasonable Charge, " Medicare carriers develop

ooding system. Thus the codes and procedures are not uniform as between carriers, the medicaid program and private Insurance companies, and result in confusion and in preventing a comparison of regional or national charges. ortice visits (3 types) and surgical procedures usually are miscoded. Unless reasons for higher charges are stated by the physician, the new level of reimbursewont la chosen.

routine

Patients should ask their doctor to prepare detailed, itemized bill showing any complications.

Secy determines what a locality will encompass. This may be out of date, having failed to account for shirtin economy and population patterns since their inception. If fees In one oggmont difford substantially from rest of locality, the mix will be affected disproportionately. In N. J. 8 rogions set initially have beon reduced to 3, combining inner cities with suburbs laaptte of different conditions in each; result is lower reimbursement.

Congressional representatives of the State could pressure the Secy and barrier to remedy inappropriate designation of locality.

9) The

Submitted by Edith Edelson, chairperson

Health/Welfare Task Force N. J. Federation of Senior Citizens

loto : Detailed analysis appears on attached pages.

Information is based mostly on "Medicare Litigation Strategies Conference Materials" Distributed by Training Resource Center, Office of Program Support, Legal Services Corp., 733 15th St., NW, Washington, DC 20005. $7.25

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146181 Remedies 1. Dept. HHS' office of Beneficiary Services in Health Care Financing Administration (HCPA) should con. sult with senior representatives &

MEDICARE B UNDER-REIMBURSEMENT

hacts about the Medicare Program Probl'toms Medicare beneficiaries pay Medicare elderly poor use

nearly 70% of their doctor's

doctors far less than Medi

billo themselves.

care non-poor.

consumer groups on ways to avoid

.

exorbitant charges.

2. Under-reimbursed individuals

should challenge the carrier and

ask for a fair hearing.

REASONABLE CHARGE

Tho roasonable charge is set

by law as the lowest of

1) aotual charge by a dr. for

a specific service;

2) oustonary charge based on all

charges submitted by the dr.

for the service during a recent

The underlined words

are the cause of the

3) provailing charge in locality
equal to 75% of customary charges
for quilar services by all drs.
in gune locality during pre-

problems

(See "Economic

Index", "Coding"&"Localities."

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