1. "We fork over millions for unproven procedures."
Medicare spends millions of dollars each year on treatments that many medical experts deem unnecessary. One example: Digital mammograms. These are often more expensive than traditional mammograms but not necessarily better for older women. A five-year clinical trial conducted by the National Cancer Institute found that digital mammograms were no more effective in finding cancers in women 50 and older than traditional mammograms. But the number of digital mammograms that Medicare paid for has risen from 426,000 in 2003 to nearly 6 million in 2008 -- a jump that increased the cost of breast cancer screening by more than $350 million, according to an analysis by The Center for Public Integrity, a nonprofit investigative news organization.
Medicare also often pays significantly more for liquid-based cytology, a screen for cervical cancer, than it does for routine pap smears, even though a large 2009 study found that the expensive test is no more effective than the traditional procedure when it comes to detecting cancer. Using the newer, more expnsive test costs Medicare an extra $90 million since 2003, according to The Center for Public Integrity. Another point of contention is that Medicare pays for screening colonoscopies for people over 75 despite the fact that the United States Preventative Task Force "recommends against routine screening for colorectal cancer in adults age 76 to 85 years."
Medical experts argue that testing shouldn't always come down to cost. "One person's 'unnecessary' care is another person's necessary," says Joe Baker, president of the Medicare Rights Center. "Medicare pays for most tests or procedures that a doctor orders." Still, there are many unnecessary procedures that Medicare pays for each year that are outside or clinical guidelines, some of which could be eliminated with better doctor and consumers education, he adds. A spokesman for the Center for Medicare and Medicaid Services (CMS) says that it "pays for services that are reasonable and necessary" though it does try to "provide physicians as much flexibility as possible in using their judgment to design a treatment plan that meets the patient's needs."
2. "Think Social Security is broke? Just look at Medicare."
With the debate raging over the astronomical cost of entitlement programs, experts say it's easy to forget that Medicare and Social Security are two different programs with different financial strains. In the short-term, at least some parts of Medicare are worse off than Social Security, according to a 2011 report by the Social Security Administration. The report concludes that the Medicare Hospital Insurance Fund or Medicare Part A, which pays for hospital insurance, "faces a more immediate funding shortfall" because it is projected to run out of money in 2024, compared to 2036 for Social Security. (Note that Medicare Part B and Part D, although expensive, "remain adequately financed into the indefinite future because current law automatically provides financing each year to meet the next year's expected costs," the report says.)
It's easy to see why Medicare is in such bad shape, experts say. Consider an average couple, both earning an average $43,500 per year. Upon retiring in 2011, they would have paid $119,000 in Medicare payroll taxes during their careers, but they can expect to receive medical services worth $357,000, according to an analysis by the Urban Institute, a research institute that educates Americans on social and economic issues. What the average person puts into Social Security versus what he or she gets out is more balanced. The same couple would have paid $598,000 in Social Security taxes and received an estimated $556,000 in benefits.
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The picture doesn't look much better going forward. In 2010, Medicare costs represented 3.6% of gross domestic product for the United States. That number is expected to jump to 5.6% in 2035 and 6.2% in 2085 -- the result of "continuing growth in the volume and intensity of services provided per beneficiary," according to the CMS, the government agency that administers Medicare.
Baby boomers are a big part of that growth. In the last year alone, more than 7,000 boomers turned 65 every single day a total of 2.5 million in 2011, according to AARP. It's this rapid aging of the boomer population that contributes to the fact that the Medicare-eligible population will more than double by 2050, according to projections from the Census Bureau. A spokesman for CMS says that thanks to the Affordable Care Act -- which was signed into law last year and designed to make health care more affordable and expansive for Americans and hold insurers accountable -- CMS is "implementing many initiatives that will help reduce long-term costs while improving the quality of care that a patient receives."
3. "We pay for dead people."
It's not just for the living. In 2010, the Center for Medicare and Medicaid Services paid more than $3.6 million for Medicare Part D (the prescription drug benefit) to deceased beneficiaries, according to testimony from Daniel Levinson, the inspector general of the U.S. Department of Health & Human Services. Between 2004 and 2008, CMS paid for 142,000 procedures at 2,119 hospitals or clinics on nearly 5,000 dead patients, at a cost of roughly $33 million, according to an analysis by PearlDiver, a medical database management company. In 2008, the Senate Permanent Subcommittee on Investigations found that Medicare had paid tens of millions of dollars to suppliers who were using the identification numbers of dead doctors when filing claims. The total amount paid for these claims is estimated to be between $60 million and $92 million, according to the subcommittee report.
What's going on here? Sometimes it's fraud -- the doctor, hospital, medical group or supplier knowingly uses a deceased person or doctor's identification number -- and sometimes it's a mistake, experts say. However, it's usually clerical error on the part of Medicare that they actually pay these claims, says Ben Young, president of PearlDiver. "It's hard for [CMS] to manage its large database effectively."
A May 2011 report from the Office of the Inspector General regarding the $3.6 million in improper Part D payments comes to a similar conclusion: "CMS's systems categorized these enrollees as alive or as having different dates of death than those listed in the SSA death master file," the report says. This happened because "its systems did not always identify and prevent improper payments."
With regards to the $3.6 million in payments to dead beneficiaries, a spokesman for CMS says the organization has now "recouped the entire amount of improper payments." In addition, it says that it "has installed modifications to its data systems to further reduce the likelihood of improper payments."
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Things Medicare Won't Tell You
The government's massive entitlement program is full of costly glitches.
By Catey Hill | SmartMoney EG – Wed, Dec 21, 2011 10:37 AM ESTLIFELONG INVESTING ON FACEBOOK
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