Overcharged Medicare patients left holding the bag

WASHINGTON — WASHINGTON -- Despite a federal law intended to protect Medicare patients against excessive doctors' bills, many patients have been overcharged and have been unable to get refunds or assistance from the government, say state insurance commissioners and the beneficiaries themselves.

Part of the problem is that, for more than a year, Medicare officials have used inaccurate, misleading language on forms sent to beneficiaries who filed claims. After a reporter made inquiries, the officials promised late last week to correct these forms and to be more diligent in monitoring the billing practices of doctors.


Another part of the problem, still unresolved, is that Medicare officials contend that they do not have the authority to require doctors to make refunds to patients who were illegally overcharged. As a result, Medicare beneficiaries still have to take the initiative in challenging overcharges on doctors' bills.

The law setting limits on what doctors may charge Medicare beneficiaries took effect in January 1991 as part of a 1989 law that prescribed a new method of paying doctors; it was an effort to slow the rapid growth in Medicare spending for doctors' services. Congress wanted to be sure that doctors losing money under the new fee schedule would not try to offset their losses by raising their charges to Medicare patients.


But many of the 34 million elderly and disabled people on Medicare are unaware of the law, and the government has done little to publicize it. Indeed, the government disseminated erroneous information throughout 1991 because the forms sent to beneficiaries were not updated to take into account the new limits on doctors' charges.

A state judge in Michigan recently had to file a request under the federal Freedom of Information Act to get data on the new Medicare billing limits. The judge, James R. McCormick of Traverse City, handles many cases brought by doctors suing patients to collect balances over and above Medicare payments.

Jack Guildroy, of Port Washington, N.Y., a 74-year-old director of the American Association of Retired Persons, said: "Much of this overcharging probably occurs as an honest mistake. In some cases, doctors are trying to get more money than they are entitled to. In either case, it is unacceptable."

After patients are examined or treated by a doctor, they receive an "explanation of Medicare benefits" stating the doctor's charges and the payment approved by Medicare for each service. The standard language used on this form tells beneficiaries, "You are responsible for a total of $ --, the difference between the billed amount and the Medicare payment."

Gail R. Wilensky, head of the federal Health Care Financing Administration, which runs Medicare, acknowledged Friday that this language was incorrect because Medicare beneficiaries are not responsible for amounts in excess of the limits set by the government. She said that the language, which was written before the 1989 law took effect, would be deleted.

Claim forms examined by the New York Times show that doctors often bill much more than the amounts approved by Medicare. In one case, for example, the doctor billed $2,504 for surgery and related services, although the limit was set at $1,204. Medicare approved $954 and paid 80 percent of that amount, $763, telling the beneficiary she was responsible for the remaining $1,741. Under the new law, she was in fact liable for only $441.

"There was some question in our minds about whether we had the authority we needed to enforce this provision," Dr. Wilensky said. "We have concluded that the overcharges are illegal. We can sanction physicians who are repeat violators. But we do not have legal authority to require refunds."

The law, the Omnibus Budget Reconciliation Act of 1989, says the government may impose a civil penalty of $2,000 on a doctor who "knowingly and willfully bills on a repeated basis" for more than the limit. The doctor may also be expelled from the Medicare program for up to five years. But federal officials note that the law does not explicitly relieve patients of the responsibility to pay those excess charges.


About two-thirds of Medicare beneficiaries have private insurance to help pay medical bills not paid by Medicare. But some insurance companies refuse to pay doctors' charges that exceed the statutory limit, so patients themselves must pay the excess charges.

Newsletters and "fact sheets" distributed by Medicare's regional offices in San Francisco and Denver say: "Beneficiaries who think they have been billed more than the limiting charge may still be required to pay the full billed amount. Failure to do so may cause the doctor to send the bill to 'collection' and could affect the patient's credit rating."

In a report to be issued on April 1, the Physician Payment Review Commission intends to recommend that the Medicare agency order doctors to make refunds to beneficiaries who were overcharged. But if Medicare officials do not do so, Congress should pass a law requiring such refunds, the panel will say. The panel was created by Congress in 1986 to advise lawmakers on payment of doctors under Medicare.