Medicare audits avoid real problems

Wed, 05 Mar 2008 06:59:59 -0500

Without a doubt, any program the size of Medicare is going to be dogged by both fraud and waste. And in theory, paying contractors on a commission is a cost-effective way to find questionable claims without staffing up the agency to a staggering degree.

The question is, can any program that uses commissioned claims hawks be fair to providers? I'd argue that the answer is no. Worse, it does nothing to address systematic problems with Medicare's internal process.

OK, I'll admit that a program that processes 4.5 million claims each work day--and a staggering 9,579 claims per minute--has one heck of a problem on its hands. It can't possibly review patient records routinely on that scale. But on the other hand, it doesn't make sense to completely punt and say "OK, we'll just turn it over and hope for the best."

Turning over such a core part of its mission to outside contractors has the potential for big trouble, no matter how the contractors are paid; they still have a motive to find errors regardless of whether they actually exist. After all, recovery contractors who don't find errors don't keep their contracts, right?

So, what do you think Medicare should do? Is there an audit solution that doesn't give contractors the wrong incentives? Would the function have to go in-house to be fair, or move in a completely different direction? Write to me and tell me what you think.- Anne

NJ hospitals going under as state bailout cash ends

Wed, 13 Feb 2008 06:59:56 -0500

A couple of weeks ago, a New Jersey commission made the decision to stop providing bailout funds--typically, advances from the state's charity care pool--to struggling hospitals that they felt weren't providing essential services. This was scary news for administrators, given that according to the commission's analysis, 38 of the state's 78 acute care hospitals scored below the state average on key financial metrics like profitability and liquidity. How bad is the situation now? Consider Barnert Hospital, which was $45 million in debt and had $200,000 in the bank. Not too surprisingly, it had to file for bankruptcy and close this month. And it's probably not the last to face this prospect.

The state's hospitals, for their part, say they might not need bailouts in the first place if the state's charity care reimbursement program paid better. According to the commission's own report, charity care payments cover only 70 cents on the dollar on average, and sometimes fall as low as 22 cents on a dollar. Given that about 1.3 million of the state's 8 million residents are uninsured, that can hit a hospital pretty hard.

To learn more about the financial issues facing New Jersey hospitals:
- read this piece from The New York Times (reg. req.)
- read the Commission on Rationalizing Health Care Resources report (.pdf)

Related Articles:
NJ begins sorting hospitals. Report
NY gets $1.5 billion to close ailing hospitals. Report
New York health system sues to prevent hospital closure. Report