Doctors decry payment delays after Medicare overhauls carrier system

Washington -- Medicare contracting reform was supposed to improve the physician claims process and make the program run more efficiently. But for many doctors, the process so far has had the opposite effect.

The Centers for Medicare & Medicaid Services is partway through a nationwide initiative to replace the patchwork system of Medicare carriers and fiscal intermediaries with a Medicare administrative contractor system divided into 15 distinct jurisdictions. When the effort is complete by 2011, all physicians and hospitals in a given jurisdiction will have one MAC that has won a contract to handle all their Part A and Part B claims.

For many physicians, this means going from a carrier they may have been billing for decades to a new, unfamiliar MAC with no prior dealings in the state. Some doctors who made the switch report that the new contractors are not up to the task.

Leslie G. Bennett, MD, an internist in Queens, N.Y., suddenly stopped receiving Medicare checks in late June just as National Government Services was taking over from long-time local carrier Group Health Inc. NGS, the new MAC for New York and Connecticut, said it was working to resolve a backlog of claims, but Dr. Bennett's payments did not start flowing again until late September. By then, the months of missed Medicare checks had taken their toll.

"We've maxed out all our credit lines, we've got payroll taxes coming up, we've got malpractice insurance payments coming up, we've got suppliers screaming bloody murder," he said. "I don't know how the hell I'm going to pay it all."

Joseph J. Tartaglia, MD, a cardiologist in White Plains, N.Y., also saw his Medicare payments dry up earlier this year after a problem arose related to his Medicare enrollment. Dealing with the MAC's customer service so far has gotten him nowhere. The payment delays also have forced him to take out loans and secure a large credit line. "It's very frightening when your practice is almost 50% Medicare and it's not paying," he said.

NGS did not anticipate that so many doctors in the state would still be filing paper Medicare claims, and most of the payment problems are occurring in that process, said Michael Davis, the MAC's manager of provider outreach and education. Although the situation can be unpleasant for those with cash-flow issues, both the physicians and the contractor will be able to tackle the learning curve and get past the initial bumps that come along with any major transition, he said.

New York is not the only state dealing with these problems. Thousands of California physicians, for example, have reported payment stoppages to Palmetto GBA, the new MAC that took over Medicare claims processing for that state and two others in September. That situation became so bad that Palmetto had to start training more personnel quickly to handle an explosion in call volume.

A race to the bottom?

Physician complaints from some of the roughly two dozen states that already switched from their old carriers to their new MACs are following a common theme. Because CMS chose the contractors in part based on competitive bids, many fear that winning MACs have more limited resources and therefore are overwhelmed by the sudden influx of claims, unable to help physicians prepare for the change and slow to address problems.

"Injecting competition into the MAC program has had the unintended consequence of creating a race to the bottom as contractors attempt to underbid each other and thus are awarded contracts that do not include an appropriate level of physician outreach and result in a diminished level of customer service," said American Medical Association Board of Trustees Chair Joseph M. Heyman, MD.

Arthur D. Snow Jr., MD, a family physician in Shawnee Mission, Kan., saw this firsthand after Wisconsin Physicians Service Insurance Corp. took over operations from longtime carrier BlueCross BlueShield of Kansas. Dr. Snow's Medicare payments, which make up nearly all of his income, did not stop outright. Instead, they slowed down significantly to the point where he needed to secure loans to keep afloat. Only after months of inquiries did he ascertain that the new contractor was using different guidelines to process paper claims.

WPS encountered some claims issues that needed fixing, but those affected only a small number of doctors, said Guy Ringle, the MAC's senior vice president of Medicare operations. During the months when the contractor was resolving the problems, it was able to keep overall payment flow consistent with past levels.

But by saving costs through forgoing a Kansas-based medical director and regular educational sessions with local physicians, the company is relying on reaching out from its Wisconsin headquarters via Web-based bulletins. Most doctors, though, are too busy to track these, Dr. Snow said. The AMA has called on CMS to mandate that contractors install at least one medical director per state instead of the current requirement of at least one per MAC jurisdiction, which can span as many as six states.

Emotion and confusion

Some MACs are being blamed for issues that are not necessarily related to Medicare contracting reform. For instance, some payment stoppages occurred because of the final switchover in late May to the National Provider Identifier system, which coincided in some cases with the transition to the new contractors.

NPI-related payment problems in California are largely behind the thousands of complaints that have swamped Palmetto GBA's phone lines since it took over, said Mike Barlow, the Palmetto vice president heading up the transition. But many of those issues date back as far as May, meaning that the state's previous carrier and the physicians did not resolve them in the intervening months. Now Palmetto has inherited the problems -- and the heightened physician emotions that go along with them, he said.

The California situation prompted CMS to revisit the contract and work with Palmetto to beef up customer service, said Karen Jackson, the Medicare contractor management group's director. Still, the transition in other states in the nine jurisdictions with new MACs has been largely uneventful, she said. The agency is forging ahead with plans to name winning bids for the six remaining jurisdictions by the end of the year.

Contrary to public perception, CMS does not always pick the lowest bidder when it chooses a carrier's replacement, Jackson said. The agency completes a rigorous technical evaluation and "cost realism" process to ensure that a bidder can deliver on what it promises. "We have a high level of confidence that we are not racing to the bottom," she said.

CMS continues to work individually with doctors on payment problems. Jackson said a physician first should try to resolve issues with his or her new MAC and then call the CMS regional office if the attempt is unsuccessful. In some cases, MACs might be able to approve advance Medicare payments if the physician demonstrates a major cash-flow problem.