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Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.
Medicare is an enormous bureaucracy, and I seldom descend into the belly of this beast. It’s a confusing place, driven by arcane and extremely complicated rules. These rules have an enormous impact on the cost and quality of health care received by Medicare beneficiaries, but connecting the dots often results in complex, long-winded exercises that can easily produce more confusion than clarity.
However, as Ask Phil readers know well, I am nothing if not a glutton for such punishment if it helps shed some light on the Medicare issues that consumers face. So I will don my spelunking gear and get right to it.
Medicare awards multi-year contracts to outside companies to manage its health benefit programs and pays them more than $800 million a year to do this work. These programs are overseen by a national network of companies called Medicare Administrative Contractors, widely known as MACs.
Basic Medicare, for example, is used by roughly two-thirds of Medicare enrollees. It includes Part A coverage for hospitals and skilled nursing homes and Part B for doctors, outpatient services and durable medical equipment.
MACs who oversee Parts A and B generate a flurry of benefits paperwork for claims in the form of Medicare Summary Notices, sending out more than 200 million of them annually. For Medicare consumers and their families, these notices are needed to monitor the accuracy of their medical charges and Medicare’s payments of their claims.
These Medicare Summary Notices, unfortunately, are often incorrect, not only because the MACs can make mistakes, but also because the health care expenses levied on Medicare beneficiaries by doctors, hospitals, home health care companies, drug makers, insurance companies, equipment makers and others often are wrong.
About one in nine of all Part A and B claims request improper payments. If you apply this 11 percent error rate to the roughly $375 billion in Part A and B claims in recent years, you wind up with more than $41 billion in improper payments.
The overwhelming reason for these errors is that the claims include insufficient documentation. Now, there could be lots of reasons for this. Medicare is, after all, wickedly complicated and uses a very sophisticated system of medical coding that would challenge IBM’s Watson.
But when investigators took a closer look at the nature of these improper claims, they found that nearly $40 billion of them involved requested overpayments and only slightly more than $1 billion were for underpayments. The only reasonable conclusion to be drawn from this is that medical providers — aka the health care industry — game the system by regularly inflating or, in Medicare lingo, “upcoding” their bills.
While these improper claims now comprise 11 percent of all Part A and B claims, as recently as 10 years ago, it was only 4 percent. In short, there are more bad actors today. And in some areas of basic Medicare, the error rate is much, much higher than 11 percent. The error rate last year for all durable medical equipment was more than 46 percent, and it was 42 percent in home health services. For data junkies, here are the details of improper Medicare payments last year.
This is not, it should be clear by now, a new problem or one whose dimensions are unknown. The MACs should be the major protectors of consumer interests here, and their record is not promising in terms of how they are executing this responsibility.
The U.S. Department of Health and Human Services, of which Medicare is a part, has an Office of Inspector General that regularly churns out reports about MACs’ performance problems and shortcomings in Medicare’s efforts to address them. So does the U.S. Government Accountability Office.
Ultimately, the MACs are the responsibility of the Centers for Medicare & Medicaid Services, which oversees Medicare. One of the perennial requests in outside assessments of the MACs is that the Centers for Medicare & Medicaid Services step up its game in overseeing the contractors and requiring them to do a better job of educating and policing providers.
A major tool for overseers here are periodic MAC reports to the Centers for Medicare & Medicaid Services about improper billing, which include details of what they’re doing about it and any areas of special concern. I asked the Centers for Medicare & Medicaid Services for access to these documents, but the agency declined. If I wished, a spokesman said, I could file a request to get them under the Freedom of Information Act, or FOIA. FOIA requests routinely linger at the Centers for Medicare & Medicaid Services for many months before being processed, thus effectively killing most inquiries.
I also asked if the agency had ever disciplined a MAC or cancelled a contract because of poor performance on billing errors. The spokesman said, “The answer across the board is no. MACs are not singularly responsible for reducing improper payment rates; it’s a joint venture between both CMS and the MACs.”
I am sure this is as reassuring to you as it was to me.
And now, on to this week’s reader missives.
Linda – Louisiana: I am about to turn 70, and my teeth have gotten really bad — breaking off, losing crowns, cavities, etc. My only option is to have my remaining teeth extracted and get dentures. I have no husband or other income and simply cannot afford to have these dental procedures done. Is there any way of getting help? My Social Security this year is $1,857 per month before deductions. I realize that is a little higher than the average. However, when it comes to paying rent, utilities, some food and home needs plus my medications and insurances, there just isn’t money to pay thousands of dollars for dental issues even though my teeth are causing me more problems than ever and are getting worse daily.
Phil Moeller: I am sorry to hear about your dental problems. I wish I had some great ideas, but I don’t. Dental issues are a huge problem for older Americans, along with hearing and vision needs. Medicare doesn’t cover routine care in any of these areas. It does cover some surgically necessary procedures, although I don’t know that it would cover mass extractions. Meager though your income is, you probably make too much to qualify for Medicaid, which does cover dental work.
The National Association of Area Agencies on Aging has local offices around the country. I suggest you contact the office closest to you and see if they can suggest resources for free or reduced-price dentistry. I am sure this question is posed to them all the time. There are dental “fairs” held in cities around the country where dentists volunteer to treat people who can’t afford regular dental care. Maybe they know of such fairs near you.
I’m sorry I couldn’t be more helpful.
Harold – Indiana: Nobody asked me if I wanted Medicare, or I would have said, “No.” But I was automatically enrolled anyway and now have Part B. I don’t want it. My wife carries insurance for me, and I do not need the Social Security Administration to force me to pay an extra premium. What can I do?
Phil Moeller: You’re right. You do not have to get Medicare.
If your wife is employed and you are covered under her plan, you can continue using her insurance even if you’re 65 or older. When she retires, both of you can get Medicare.
If your wife is already retired, however, and your coverage is through her retiree insurance, it’s quite possible you would need to get Medicare. In most employer retiree plans, Medicare is needed and becomes the primary insurer at age 65.
But on the assumption that she is still working and has active employer group health insurance, you should call Social Security at 1-800-772-1213 and tell them you want to cancel Part B and have any premiums refunded to you.
Unfortunately, even though Social Security messed up here, it can be a hassle to drop Part B. Along with a form to end this coverage, the agency also may require you to submit a proof of employer insurance form or even come in to a local office to do this in person.
I hope you don’t have too hard a time doing this, but if you do, please let me know.
John – California: I will turn 65 this August. I have medical insurance and plan to continue working. My human resources department is telling me I don’t need Medicare until I retire. Is this the right thing to do?
Phil Moeller: Most likely, your HR folks are correct. So long as you continue working and have group health insurance through your employer, you do not have to get Medicare when you turn 65 and will not face any late-enrollment problems when you eventually retire and then get Medicare.
However, I urge people to take advantage of their Medicare option by reviewing their health coverage and making sure they will be better off — both financially and in terms of coverage — by staying on their employer plan. Consider giving it a free look. With many employer plans reducing coverage, raising rates and installing high-deductible plans, it’s always possible you’d be better off with Medicare.
Ron – Ohio: When I retire and get Medicare in January of 2018, will Medicare use my 2016 tax return to determine if I owe a high-income surcharge? We have substantial income now, but it will drop dramatically when I retire. Based on current rates, I am looking at a $389.80 Part B monthly premium and $72.90 for Part D. I feel like I could be hosed for my successful executive career when I retire. Am I reading this correctly?
Phil Moeller: You’re right about there normally being a two-year lag, meaning your 2016 tax return would be used as the basis for your 2018 IRMAA determination (IRMAA stands for Income Related Monthly Adjustment Amounts). However, because you’re going to file for Medicare so early in the year, it’s possible Social Security, which manages IRMAA, would use your 2015 return.
Hopefully, this will not matter to you. The IRMAA rules include waivers based on “change of life” events. One of these is simply the act of retirement and the attendant decline in income. It’s called “work stoppage” on the IRMAA appeal form.
Ted: First, let me say thank you for your book, “Get What’s Yours.” I am now 69, and until I read your book, I did not know that my wife and three children under the age of 16 were eligible for benefits. I filed for child-in-care spousal benefits and child benefits. Recently, I received over $19,000 in back payments and will go forward with an additional $1,908 a month.
I do have one question, please, regarding widow’s benefits. Should I die, will my wife be able to claim widow’s benefits at age 60 if she has not worked in the United States and never contributed to Social Security?
Phil Moeller: Stories like yours are the reason we wrote the book. I am so glad it’s been helpful to you.
Your wife does not need to have contributed to Social Security or worked in the U.S. to be eligible for a widow’s benefit in the event of your death. And while she may qualify to receive this benefit as early as age 60, it will be reduced by early claiming reductions and will not reach its maximum value unless she delays taking it until her full retirement age. There can be many good reasons for not delaying, of course, but I wanted to make sure you were aware that deferring benefits will increase the size of the monthly payment she would receive.
Mike – Virginia: I’m a military retiree. It’s mandatory for me to convert from Tricare Prime to Medicare at age 65. I will not retire from work until the end of December. Can I sign up for Medicare as mandatory, but not collect a Social Security check until January?
Phil Moeller: You do not need to collect Social Security benefits just because you’re signing up for Medicare. The two decisions are separate. Your note indicates you want to wait until next January to claim Social Security. I’d urge you to consider waiting even longer. Once you’ve reached your full retirement age, benefits rise at the rate of 8 percent a year if you delay claiming them. They peak at age 70.
Phil Moeller is the author of “Get What’s Yours for Medicare: Maximize Your Coverage, Minimize Your Costs” and the co-author of the updated edition of The New York Times bestseller “How to Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. On Twitter @PhilMoeller or via e-mail: firstname.lastname@example.org.
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