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examiners from January through May 1975 was at an annualized rate of 28 percent-well under one-half the 77 percent rate that existed in 1974. While some of this reduction is unquestionably due to general economic conditions, we are convinced that a large part of it is attributable to improvements in supervision and management practices, and to the fact that in the past 6 months claims examiners have been achieving a higher level of performance than in the past, which in itself increases job satisfaction.

Another factor impacting on turnover in 1974 and previous years has been the historically low unemployment rate in Jacksonville, Florida. While comparative figures from other large employers with similar types of operations are not easily obtained, our contacts with such employers have indicated to us that they, too, have experienced a relatively high rate of turnover. Where there is little unemployment, job mobility is high; and a workforce composed largely of younger persons is peculiarly subject to turnover for many reasons.

COSTS AND PRODUCTIVITY

In connnection with the improved performance level of Medicare Part B employees, the productivity figures for 1974 cited by GAO may be compared to current productivity figures. Figures for the last half of 1974 showed that the number of claims processed per 100 manhours was 155 for Florida Blue Shield and 256 for all carriers. Our most recent data from the Bureau of Health Insurance indicated that Florida Blue Shield's productivity per 100 man-hours in April was 196. While this is not yet the level of performance we expect or desire to reach, it does represent a 26.5-percent increase.

A similar improvement has occurred as regards cost per claim processed. The figures for the last half of 1974 showed a cost per claim of $4.57 for Florida Blue Shield, as compared to $3.36 for all carriers. For the period July 1974 to April 1975, however, the cost per claim at Florida Blue Shield was down to $4.13, and for April 1975 alone the cost per claim was $3.60 as compared to a national average (as of December 1974) of $3.36. Again, this is not satisfactory to Florida Blue Shield management, but it does indicate a trend that we are committed to seeing continue.

In regard to the cost of processing claims, one significant measurement has, so far as we know, escaped notice. This is known, technically, as the cost per payment record. Usually, when physicians submit Medicare claims on an assigned basis (meaning that the physician accepts payment directly from Medicare), the claims involve one service and/ or one physician, and therefore one payment record is involved. When beneficiaries themselves submit claims on an unassigned basis, they generally accumulate several bills and submit them as part of a single claim. (One claim may include as many as 32 separate items under our processing system; others do not allow this many items on a single. claim.) Processing a claim that involves several different services and suppliers obviously requires more time than processing one that involves a single service or single physician.

Because Florida has a low rate of assigned claims, the majority of claims processed by Florida Blue Shield involve more than one

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service and more than one physician or supplier. Most other carriers generally have a higher assignment rate, and therefore a higher number of claims for only a single service and physician. When costs of processing are allocated, not on a per-claim basis but on the basis of the number of different doctors or suppliers or bills paid (i.e., on a payment record basis), the gap between the cost at Florida Blue Shield and the cost at other major carriers is considerably smaller than the difference in cost per claim.

COMMUNICATIONS PROGRAM

Recognizing that one key to improving claims processing time was an improvement in the condition of the claims being received, Florida Blue Shield began during the summer of 1974 an intensive program to teach beneficiaries how to file complete, correct claim forms and to encourage physicians to assist beneficiaries by completing claim forms for them on unassigned claims. In cooperation with local organizations, over 60 workshops have been presented for beneficiaries, particularly in those portions of the State with heavy concentrations of older citizens. Presentations have been made to over thirty medical societies and over 50 groups of medical assistants. Well over a million brochures detailing the correct procedure for filing a Medicare claim have been distributed through direct mail, at workshops, and through physicians' offices. A taped television presentation is also in preparation.

We are not yet sure whether this communications effort has been successful. We are sure that if the condition of the claims we receive cannot be improved, a certain number of claims will continue to be delayed. We also recognize that the beneficiary who files his or her own claim incorrectly is almost never made aware of the error or omission involved, in an educational way, and we think that if carriers were allowed to return such claims to beneficiaries or physicians, along with a statement of the problem, the educational effect would be highly beneficial to all concerned. As a simple example of a common error that leads to delay, we receive thousands of claims that include receipted bills.

SPECIFIC BLUE SHIELD RECOMMENDATIONS

1. We recommend that carriers be permitted to return claims with incomplete information on them to the beneficiaries or physicians who submit them, along with a notation indicating the information that is needed, and that these claims be deleted from the carrier's inventory. The reason for this recommendation is simple: when carriers are not permitted to return such claims, those who submitted them never learn how to submit correct and complete claims. Carriers may obtain the necessary information through letters or telephone calls, of course, but this accomplishes little toward the end of correcting the problem at its source.

There will obviously be some claims that should not and would not be returned: multiple surgery claims, for example, would best be completed through obtaining a copy of the operative report. Claims that have been returned once and that again come in in incomplete fashion would probably best be developed by the carrier. But in most cases, we

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

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 hoax on those persons who can least afford to be without the vital reimbursements.

The subcommittee reviewed the testimony given, the preliminary General Accounting Office report, the pre-hearing conferences with the Blue Shield Corporation and previous reports on medicare and believes that further investigation is not only warranted but necessary.

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