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Managing Medicare's Costs

Medicare Problem Solving (1 of 2) – What to do when Medicare says no

The most common reason that people call the Medicare Rights Center’s national helpline is to complain that their medical claim has been denied. That was true in 2012 and again in 2013, when there were more than 5,000 of those calls. That’s according to the Center’s recently published analysis of its call data for that year.

When Medicare or a health insurance company turns down your medical claim, you can either pay the full amount or appeal the decision. Of the one billion Medicare claims filed each year, only a small fraction — about 550,000 — are denied. But those denials represent billions of dollars that Medicare recipients or providers will have to pay unless they can successfully appeal.

Appeals are valuable and underutilized tools, say some experts. And the odds of success are greater than you might think. “Folks don’t appeal as much as they should,” the Medicare Rights Center’s Douglas Goggin-Callahan told the Wall Street Journal. “If you and your doctor feel you should be entitled to a service, you should go through the process.”

Traditional Medicare, Advantage plans, and Part D plans all have different appeals processes, but in each of them there are five levels of appeal. If you lump all the appeals together, it took an average of 398 days to reach the third level in 2012. The consolation for the long wait is that the chances of winning get better at each level. Only 20% of appeals were granted at the first level, according to a 2012 government study. By the third level, however, the chances of success increased to 56%. Appeals that dealt with inpatient care had the highest average success rate at 72%.

You should assess whether appealing is worth your time and effort. To get a favorable ruling on a $150 claim, which is the minimum amount you can appeal in 2015, you will need to enlist your doctor’s help, submit the required paperwork, and keep good records throughout the process. Remember, though, that a few appeals are decided quickly, perhaps because of an easily corrected clerical mistake made by the doctor’s office staff.

What steps can you take to reduce the chances of having a claim denied? Probably the simplest one is to enroll in traditional Medicare, also called original or fee-for-service Medicare. Only 8% of the Medicare Rights Center’s helpline calls about claims denials were from people in traditional Medicare.

Traditional Medicare’s reluctance to deny claims was apparent in the billing information released by Medicare last year showing how much Medicare paid each provider in 2012. The top-paid 100 doctors received $610 million in Medicare reimbursements, with one Florida ophthalmologist raking in $21 million. The billing data makes it clear that Medicare does not deny many claims. One reason there are so few denials is that providers inform you if they think Medicare may not cover your visit or treatment. You may also be asked to pay upfront and to sign an Advance Beneficiary Notice of Noncoverage.

Some medical services that are automatically approved by traditional Medicare are more difficult to get approved by Advantage plans. So if you have a serious chronic disease, see multiple specialists, or want to try a leading-edge treatment, your best chance of avoiding a denial is in traditional Medicare. It routinely okays claims for second and third opinions and for certain experimental treatments in approved clinical trials, while many Advantage plans do not.

Still, you should be aware of the downside of traditional Medicare. Its supplemental coverage — primarily Medigap policies — is the most expensive type of health insurance. Because Medicare rarely says no to claims, doctors and patients are tacitly encouraged to use more medical services, some of them unnecessary. That raises the prices of the supplemental insurance that helps to pay for these unneeded services.

If the criticism of traditional Medicare is that it’s too permissive, the charge against Advantage plans is that they are too restrictive. Some 38% of the Medicare Rights Center’s helpline calls about denials of coverage in 2013 dealt with Advantage plans — almost five times as many complaints as for traditional Medicare. Since only 30% of Medicare beneficiaries are enrolled in Advantage plans, that means you are 15 times more likely to have a claim denied in an Advantage plan than in traditional Medicare.

That large discrepancy is surprising because Advantage plans must cover the same services as traditional Medicare. But managed-care plans have broad discretion to determine which types of treatments they will approve. They have financial incentives to try the least-expensive approaches first and to delay or deny coverage for costlier procedures.

Advantage HMO plans will almost always deny claims from doctors who are not in the plans’ networks (emergencies are exceptions). Yet Advantage plans can change their networks at any time during the year, so your primary care doctor may be in the HMO’s network in January but not in July. UnitedHealthcare has terminated the contracts of more than 10% of its Advantage plan network doctors in the last two years. Enrollees are supposed to receive notices if their doctors are no longer in their plan’s network, but if they don’t receive them or don’t read them and the doctor doesn’t inform them, their claims when they see those doctors will be denied.

What if your claim is denied? First, notify the doctor who performed the test or procedure that’s in question. Occasionally the problem is as simple as a coding error, but even if it is something else, your physician will need to support your appeal. That’s true even when the denial is for something as simple as a restriction placed on one of your prescription drugs.

Next, put your appeal in writing and keep good records as you go through the process. And consider enlisting the free help of a Medicare advocacy expert – either from your local state health insurance program (SHIP) or from national organizations like the Medicare Rights Center and the Center for Medicare Advocacy. These agencies can help you determine whether your appeal has merit. And if it doesn’t, they won’t represent you. Advocates are especially valuable in appealing Part D denials, where the complex rules can be baffling.

Here is Medicare’s booklet describing how to appeals claims denials. ◊◊

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