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believe that beneficiaries and physicians would be best served by being asked to assume some responsibility for the submission of claims that can be processed without additional work on the carrier's part.

2. We recommend a time limit of 15 months from the date of service for the filing of claims.

The fact that beneficiaries may now file claims for up to 27 months after the date services were received complicates claims processing. It often confuses the deductible status; it may complicate the obtaining of additional information; and it results in the filing of many duplicate claims since, with time, beneficiaries forget whether they have filed claims previously: We see no disadvantage to a reduction in the time limit for filing of claims, and several advantages.

3. We recommend that the Medicare handbook given to beneficiaries be revised to include among other things, a discussion of the prepayment screening process through which carriers may deny claims because the services rendered are judged to be medically unnecessary.

Although the present handbook does mention that services must have been necessary for the diagnosis or treatment of an illness or injury, we believe beneficiaries are often unaware that the denial of claims on the grounds of lack of medical necessity is not the work of arbitrary carriers but is envisioned in the Medicare law and is essential to a fiscally sound program. The result of not explaining the medical necessity requirement is dissatisfaction with the program and with the carrier, and an increase in requests for reviews and Fair Hearings.

4. We recommend several changes in the approach to payment for durable medical equipment.

At present, durable medical equipment for which payment may be made under the program may either be rented or purchased. It happens on occasion that equipment is rented for such an extended period of time that its purchase price is paid by the program several times over. This is not necessarily the result of carelessness or thoughtlessness on anyone's part; it may be that the need for such equipment is of longer duration than anticipated.

Nevertheless, this creates an unnecessary cost to the program.

5. We recommend a thorough revision of the approach to reimbursement under Medicare Part B.

Reimbursement is, in our experience, the leading single cause of dissatisfaction with the program among doctors and beneficiaries alike. The present approach to reimbursement, the so-called "reasonable charge” based on individual and community charge profiles, is difficult to explain to beneficiaries and doctors; is administratively expensive; generates considerable correspondence; and—in its present stateleads to significant differences between actual charges and Medicare allowances. It does tend to control costs from the government's point of view, but in areas with high proportions of older citizens it discourages physicians from taking assignment and therefore shifts costs from the program to the aged beneficiaries.

We recommend one of two courses in this area :

(1) Instruct carriers to allow the same Usual, Customary, and Reasonable amounts under Medicare Part B that they would allow in their private business programs. In Florida this would change the allowable charge level for individual physicians from the 50th per

centile to the 90th percentile. (N.B. These are not percentages; the 90th percentile is that amount that would pay in full the lowest 90% of charges for a given service.)

This would require that Congress repeal that portion of P.L. 92–603 that will soon require physician charge increases under Medicare to be tied to an economic index.

6. We recommend conversion to a plastic Medicare I.D. card, similar to a credit card, which could be used by physicians and hospitals to imprint beneficiary names and Health Insurance Claim numbers on the claim forms.

This recommendation arises because of the surprisingly large number of claims we receive with incorrect names and/or Medicare numbers. The omission of, or an error in, the single letter suffix to the Medicare identification number can result in delays, claim rejections, and payment errors. The same is true if there are errors in the beneficiary's name.

We would also note that a plastic I.D. card would be more permanent than paper cards.

7. Our last and most important recommendation is best couched in the words of two recent studies of the administration of Medicare. We recommend that "SSA should reduce its role in carrier decision-making and rely on its capacity to test carrier performance by results," and that “SSA and its contractors (should) develop a relationship which will enable the private sector to add its full capability to the administration of the Medicare program.” .

The latter recommendations are from the Administration of Medicare: A Shared Responsibility, the Final Report of the Medicare Project Panel of the National Academy of Public Administration.

SUMMARY

(MEDICARE)

The hearings and inquiry concerned itself with the situation of delays and problems in the State of Florida but the implications of the problems are nationwide.

The subcommittee felt that the testimony presented during the hearings will serve as a basis for the continued examination of the efficiency of Part B, of the Medicare Program.

The problems encountered and experienced by the Blue Shield Corporation of Florida are not entirely particular to Florida alone but because Florida's population represents a significant number of elderly persons, its problems are magnified and demands at least an adequate delivery system by independent carriers.

The fact that the Bureau of Health Insurance/Social Security Administration has reassigned 30 percent of the present medicare caseload to another company indicates that the BHI is "aware” of Florida's "uniqueness."

The overwhelming issue expressed by the subcommittee was the efficiency of the system of providing benefits to recipients.

Senator Chiles said:

An improvement in the delivery of this service is a must. Those persons who submit unassigned claims to their carriers use money that is often allocated for

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other survival items and so many times they must do without the other items to pay their medicare bills.

Necessary delays are hard enough to bear but unnecessary delays are a cruel

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ments. Verne The subcommittee reviewed the testimony given, the preliminary

General Accounting Office report, the pre-hearing conferences with vende the Blue Shield Corporation and previous reports on medicare and be

lieves that further investigation is not only warranted but necessary. DESDE

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APPENDIX

COMMITTEE ON GOVERNMENT OPERATIONS,
SUBCOMMITTEE ON FEDERAL SPENDING PRACTICES,

EFFICIENCY, AND Opex GOVERNMENT,

Washington, D.C., July 1, 1975. J. W. HERBERT, President, Blue Shield, Inc., Jacksonville, Fla.

Dear Mr. HERBERT: Several questions have arisen out of testimony heard before the U.S. Senate Subcommittee on Federal Spending Practices, Efficiency and Open Government on June 13, concerning Florida Blue Shield's involvement in the Part B Section of the Medicare program. The investigation and inquiry at these hearings and in subsequent correspondences centered on abnormal delays in the processing of Part B claims in Florida. A few questions were posed concerning general aspects of the operation of Blue Shield in Florida, both in conjunction with and independent of the Social Security Administration.

As an extension of issues raised in the hearing, the Subcommittee would like to have the following questions answered by Blue Shield.

What percentage of your operation is non-profit or federally funded? Assuming your Medicare section is indeed non-profit, what special advantages or incentives are incurred by a private company in taking over Part B operations?

Viewing the fact that 8 private companies expressed a firm desire to take over Part B operations in Miami, what forms of "bidding" take place to allow for selection of one company over others?

To the best of your knowledge, why was your company selected to head the program in Florida and how long (what) is the term of your contract with the Social Security Administration?

We would appreciate comments concerning these questions as well as a general explanation of the funding and operation of Blue Shield of Florida. With kind regards, Sincerely,

LAWTOX CHILES, Chairman.

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