Hospital Industry Raids The Medicare Trust Fund.

Every year, millions of Americans pay federal taxes to support government programs that provide health, wellness, and other benefits to those who need it most. One would assume that safeguards are in place to ensure that our taxpayer dollars are used appropriately and efficiently. However, a recent Government Accountability Office (GAO) report states that rampant waste exists within the Medicare program. In 2014 alone, Medicare overpaid hospitals and other healthcare providers nearly $60 billion for services that were unnecessary or billed improperly. That’s billion—with a “B.”

Would you allow yourself to be overcharged for your groceries and not ask for a refund? Would you go out to dinner and pay for items on your check that you never ordered? The federal government would, and it is wasting your taxpayer dollars while doing so.

The GAO report states that Medicare has the highest level of improper payments government-wide, which should be unacceptable given the program’s important role as the healthcare safety net for the nation’s seniors and other beneficiaries. Pair that with a recent Medicare Trustee report that says Medicare will go bankrupt in the next 15 years (by 2030). Clearly, Medicare waste needs to be made a higher Congressional priority, or we can bid farewell to a program that we hoped would be there for us when we turn 65.

In 2009, Congress launched a program to provide vital oversight to Medicare, the Recovery Audit Contractor (RAC) program, which leverages the expertise of independent contractors to review post payment Medicare claims and determine if they have been billed according to Medicare policy. Since the RAC program began, these contractors have returned more than $9 billion back to the Medicare Trust Fund while reviewing less than 2% of all Medicare claims. This work to recoup dollars that have been inappropriately billed helps prolong the life of this vital healthcare program.

So, what’s the problem? Congress has benched the RACs, the only program looking out for taxpayer dollars, while Medicare hemorrhages billions due to provider complaints that they are “burdened” by Medicare oversight programs.

In fact, in an effort to game a broken system and retain as much money as possible, whether billed correctly or not, hospitals have spent tens of millions of dollars lobbying Congress to shut down the RAC program, one of the most successful oversight programs in U.S. history. Hospitals most passionately fight against review of Medicare Part A claims, which are directly paid for by taxpayer dollars.

Medicare improper billing runs across a wide spectrum—including everything from simple coding mistakes to outright fraud. For example, providers have inappropriately charged Medicare ten times what it costs to administer a single medication, have billed for care provided after a patient’s death, and also have held patients in the hospital longer than necessary in order to recoup a higher reimbursement rate.

Guest post written by Kristin Walter

Ms. Walter is spokesperson for the Council for Medicare Integrity, a non-profit organization.

What Is Medicare?


Medicare is a federal health insurance program that covers millions of Americans. In general, you are eligible for Medicare if you are 65 or older, or you are younger than 65 and meet criteria for certain disabilities, or have End-Stage Renal Disease (ESRD).

The Medicare basics have four main components:

Medicare Part A helps pay for inpatient hospital care, skilled nursing care, some home-health services, and hospice care.

Medicare Part B helps pay for physician services, outpatient hospital care, and other medical services not covered by Part A. Together, Parts A and B are known as Original Medicare.

Medicare Part C, usually known as Medicare Advantage, is offered by private health care organizations.  These plans cover all services under Parts A and B and usually offer additional benefits.

Medicare Part D helps pay for outpatient prescription drugs and is available through private health care organizations such as Kaiser Permanente. Part C plans often include Medicare Part D coverage.

About Medigap (Medicare Supplement) Coverage.

What is Medigap?

Original Medicare Part A and Part B has a variety of deductibles, co-payments, and other out-of-pocket costs. Medicare Supplement insurance plans, also known as Medigap plans, can pay for those out-of-pocket costs which can simplify your healthcare expenses. These insurance plans work alongside Medicare Part A and Part B.

Types of Medigap Plans

You must be enrolled in Medicare Parts A and B in order to purchase a Medigap plan. In 47 states, there are 10 standard designs of Medicare Supplement Insurance. They cover different levels of out-of-pocket costs within Original Medicare Parts A & B. Using the links below, you can see what is covered by each of the 10 Medicare Supplement plan types.

Turning 65? Don’t Miss Open Enrollment Period for Medigap Insurance.

Turning 65? Don’t Miss Open Enrollment Period for Medigap Insurance

Medicare plans aren’t intended to cover every medical expense – there are still copayment, coinsurance, and deductible payments to be made. Can you afford them yourself, or should you get Medigap insurance?What is ‘Medigap insurance’?

Medigap insurance is simple: You pay a modest premium each month. In exchange, you take much of the pain out of any possible deductibles or copayments.  While Medigap is standardized under federal law, these policies are private health insurance plans that cover expenses you may still have even after Medicare has paid its portion of your medical bills. This may includes copayments, coinsurance, deductibles, physician fees, lab fees, the cost of durable medical equipment, and sometimes more.

There are ten types of Medigap policies available; all have standardized minimum benefits and use the same letter names (with the exception of Massachusetts, Minnesota, and Wisconsin, which each have their own system). This makes it easier to compare rates offered for the same policy by different companies, and to know what policy to shop for if you move to another state. When considering Medigap insurance plans, your first step is to find out what is available in your state.

The good news is that any standardized Medigap policy is guaranteed renewable, which means that coverage cannot be canceled for any reason other than failure to pay the premium. You cannot be dropped because you are sick.

Am I eligible?

Anyone age 65 or older and enrolled in Medicare Part B can purchase Medigap. However, you may not need a Medigap policy if you:

  • Are already enrolled in a Medicare Advantage Plan (Part C). In fact, it is illegal for anyone to sell you a Medigap policy if you are already in a Part C Plan, unless your Part C coverage will end before the Medigap insurance begins.
  • Are covered by Medicaid. Except for certain circumstances, it is illegal for an insurance company to sell you a Medigap policy if you receive Medicaid.
  • Have other health insurance, such as coverage from employer/union group health, TRICARE, or VA benefits.

If you are eligible for and in need of Medigap coverage, it is very important to understand the advantages of the open enrollment period.

What is the open enrollment period? Why is it so important?

The open enrollment period for Medigap insurance is a one-time only six-month period that begins the first day of the month in which you are 65 years of age AND enrolled in Medicare Part B. During open enrollment, you have the right to purchase any Medigap plan that’s available in your state without the risk of refusal and without paying extra for any pre-existing conditions. (Depending upon your previous coverage, however, there may be a waiting period for coverage related to a pre-existing condition).

If you are 65 and already have employer-provided group health insurance, you may wish to wait to enroll in Medicare Part B. When your employer coverage ends, you can enroll in Part B without a late enrollment penalty, and then your Medigap open enrollment period will begin when you need it.

What if I don’t need Medigap now, but need it later?

In addition to the open enrollment period, there are certain other situations under which you have the right to guaranteed Medigap coverage regardless of any pre-existing conditions, at the same price for which it would be offered to anyone else. These rights are called “guaranteed issue rights” or “Medigap protections” and they occur in the following circumstances:

  1. Your other health care coverage changes or is lost.
  2. You’ve had a Medicare Advantage Plan (Medicare Plan C) for less than a year and want to switch (or, in some cases, switch back) to Original Medicare with a Medigap plan.
  3. The carrier of your current Medigap insurance ceases to exist, or has misled you or otherwise broken the rules.

If any of these situations occur, you have 63 days to exercise your guaranteed issue rights to secure Medigap insurance. Click here for detailed information about situations, rights, and deadlines.

It is important that you be able to prove your previous coverage and the date it changed or ceased; keep all letters of notification, claim denials, or similar documents, and the envelopes in which they arrived.

How much does it cost?

Each insurance company sets its own premium, or price, for the policies it offers, and there are a number of ways in which they may choose to do so. When comparing premiums from different companies, it is important to consider the method used in pricing – be sure to ask for this information before buying.

Issue-age-rated, or “entry-age-rated” policies have premiums determined in part by the age at which you first purchase the policy. A premium may increase due to inflation or other issues, but will not increase based on age.

Attained-age-rated premiums increase with age in addition to inflation or other external issues. These premiums are quite low at first, but can ultimately be the most expensive.

Community-rated, or “no-age rated” policies’ premiums may fluctuate due to inflation or other issues, but are not based upon your age.

Other factors influencing price include discounts that the carrier may offer; for multiple policies, paying yearly, and so on.

So should I get Medigap?

As with any insurance, its value lies in both peace of mind and in potential financial savings – in this case, the known cost of premiums versus the unknowable cost of medical bills after Medicare. Take the time to carefully consider your immediate and likely future needs, and weigh that against your peace of mind and financial capabilities. Medigap doesn’t make sense for everyone – and it should be carefully considered in light of your own individual situation. You should also compare it to the various Medicare Advantage programs available in your area. Your agent is an expert in the various plans available and the advantages and disadvantages of each one.

Individual Health Insurance

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