Four Medicare Myths Exposed


These misconceptions could complicate your life and cost you money.

Fam Pract Manag. 2001 Nov-Dec;8(10):14.

Have you heard the one about the unsuspecting physician who pulled into the mini-mart late one night to buy some gas and returned to his car to find a Medicare auditor hiding in his backseat, brandishing an overpayment letter? It’s one of the many myths that make up the Medicare lore. In hopes of relieving some of your anxiety about the Medicare reimbursement process, here we describe the truth behind some of the most popular myths:

Money in the bank

Myth: When Medicare carriers deny claims, they get to keep the money, thus providing them with an incentive to deny as many claims as possible.

Reality: The money used to pay Medicare benefits comes from Medicare trust funds held by the federal government. If a claim is denied, the money stays in the trust fund. Medicare pays its carriers on a contractual basis, and they receive the same amount for each claim processed, whether the claim is paid or denied. In fact, to the extent that denied claims cost the carrier more in terms of resources dedicated to appeals, the carriers actually have an incentive to pay claims rather than deny them.

I bet I’m going to jail

Myth: If you deal with Medicare, it is a safe bet you’ll be prosecuted for coding errors.

Reality: The odds of being prosecuted are nearly infinitesimal. In 1999 (the most recent year for which data are available), the federal government prosecuted 43 of the more than 750,000 physicians in the United States. Furthermore, Medicare processes 99.5 percent or more of all Medicare physician claims without auditing them. More people are attacked by sharks or struck by lightning each year than are prosecuted for Medicare fraud and abuse.

Prevention doesn’t pay

Myth: Medicare is too cheap or too uninformed to pay for preventive medicine.

Reality: The Medicare statute established by Congress (section 1862 of the Social Security Act) states that no payment may be made under Medicare for any expenses incurred for items or services that “are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” Thus, preventive services are excluded by law unless Congress grants an exception and writes it into the statute. Fortunately, Congress has been granting an increasing number of exceptions over the last few years.

Contract for excluded services

Myth: To provide any service excluded by law from Medicare coverage or to receive payment for services denied coverage by Medicare, you must have a private contract with the patient and must agree not to take Medicare patients for two years.

Reality: You have a right to receive payment from a Medicare patient for services excluded from Medicare coverage. For services excluded from Medicare coverage by law, you may charge your standard fee and collect it from the patient. Similarly, you have a right to receive payment from a Medicare patient for services that are not covered for reasons such as medical necessity – provided the patient has signed an Advanced Beneficiary Notice before the service is provided. In neither case is a private contract required.

The rest of the story

Some say the doctor at the mini-mart made a run for it and was never heard from again, but I doubt there’s any truth to that. The auditor would surely have tracked him down.

Seriously, I hope this article will bring some much-needed clarity to your dealings with Medicare.

Kent Moore is the AAFP’s manager for health care financing and delivery systems and is a contributing editor to FPM.

Conflicts of interest: none reported.

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Copyright © 2001 by the American Academy of Family Physicians.
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