Medicare Bungles West Coast Payments

November 18th, 2008 | Sources: LA Times

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Medicare owes tens of millions of dollars to physicians in California, Nevada and Hawaii. The delinquent payments are in some cases so large and so late that physicians have been forced to turn away beneficiaries, lay off staff and default on rent.

Medicare owes Tim Ganey and his oncology practice $750,000 for example, and as a consequence the practice doesn’t have cash to purchase chemotherapy drugs for its patients. So it either needs to take out a loan, cajole the drug companies, or admit patients to hospitals which are inconvenient and inefficient places for cancer therapy.

Things have gotten so bad for Walnut Creek cardiologist Sally Davis that she’s taken to doing the office laundry to save money. Davis told the Los Angeles Times that Medicare owes her practice $700,000.

The payment delays result from Rube Goldberg-like process complexity in 2 organizations.

Earlier this year, the Centers for Medicare and Medicaid Services began assigning new ID numbers to physicians as part of its plan to expedite Medicare payment. ID assignments were supposed to be complete by May but physicians in some western states had not received their numbers by September.

That was when CMS switched Medicare claims processors for those western states, and the handoff didn’t go well. The new vendor, Palmetto GBA of South Carolina had to contend with unstable CMS databases arising from the ID project. It may not have received properly formatted information from CMS or the previous vendor. And it managed to botch a host of mundane administrative tasks like processing address change requests.

Then, when Palmetto went live it was not staffed to handle the flood of calls from irate physicians. Palmetto’s call center received 45,000 calls that first day. It was staffed for 2,500. Three months after start-up, 90% of calls to Palmetto were still greeted by a busy signal.

But CMS officials have defended Palmetto. Torris Smith, an associate regional administrator pointed to Palmetto’s 40 years of experience as a Medicare contractor and asserted the organization was selected using a “full and open competition.”

“There are always going to be general transition issues,” Smith told the Times. He added that the backlog of applications for the ID numbers should be cleared out by the end of the year.

No word though on when the docs actually get paid.


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