Panel Told Medicare Pays Millions That Private Firms Should Cover

Posted: July 12, 1990

WASHINGTON — Taxpayers are paying at least $400 million each year for Medicare costs that should be paid instead by private insurance companies, government investigators reported yesterday.

In some cases, insurance companies are improperly shifting costs to Medicare, they said, while in others doctors and hospitals are sending claims to Medicare that should be submitted first to private insurers.

The problems stem from laws passed in the early 1980s that required private insurance companies to pay medical bills when a Medicare beneficiary was working and had employer-provided health insurance. Bills or treatment not covered by the private insuror but covered by Medicare could then be submitted to the government.

Medicare is the federal health-care program for the elderly. Most Americans qualify for the program upon reaching age 65.

Michael F. Mangano, deputy inspector general with the Department of Health and Human Services, said the problem could be worse because the government does not know how many of Medicare's 33 million beneficiaries are also covered by employer-provided health-insurance plans.

Mangano accused Medicare administrators of not taking enough steps to improve monitoring, despite auditors' repeated warnings of problems. He added that budget cuts in auditing programs would only make the problem worse in the years ahead.

A spokesman for the department, which administers Medicare, said that reforms had been adopted that were saving the government $2 billion a year and that more would be done.

The criticisms were aired yesterday at the first of two days of hearings by the Senate Governmental Affiars permanent subcommittee on investigations.

The panel's staff, after conducting an investigation, reported that failures to comply with Medicare requirements "exist at every level of the health-care delivery system."

Republican staff members said the most direct solution may be to require employers or insurance companies to give the government the names of Medicare beneficiaries who are working and covered by employer-sponsored insurance

plans - something that is not done now.

Subcommittee investigators examined the records of one insurance company - Provident Life & Accident Insurance Co. of Chattanooga, Tenn. - as part of its probe and concluded that the firm had a "long-standing, coordinated practice" of evading payments and shifting costs to Medicare.

They showed internal company documents that investigators said demonstrated the firm's failure to assume primary responsibility for the bills of working Medicare beneficiaries covered by private insurance.

In response, Provident president Winston W. Walker denied wrongdoing and blamed any problems on confusing Medicare regulations and the failure of doctors and hospitals to file claims properly.

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