Is Medicare and Medicaid Reimbursements fairer than Private Insurers: a Brief Comparison

Various providers despite being paid lesser by government than by commercial insurers believe that Medicare and Medicaid reimburse more fairly than commercial payers. Findings from a recent survey depicted that 93% of respondents feel that Medicare is fair always or frequently while 62% felt the same about Medicaid, whereas 62% were of the view that commercial plans are not fair in all or most cases; and 49% said commercials are fair sometimes. One of the factors in assessing fairness can be speed –approximately two-thirds of respondents said Medicare pays the fastest, 26% said Medicaid and only 9% opted for commercial payers.

The differences between Medicare, Medicaid and private insurers is not limited to the reimbursements but are also observed in various other fiscal features such as the overheads where private insurance companies have more overheads in the form of administrative costs, overhead for Medicare – approximately 2-3% whereas for private payers – 12%. This comparison sheds some light on the way government and private payers operate as far as their fiscal policies are concerned. However the looming Medicare cuts though postponed by the Congress time and again will affect physician perspective towards government payers.

The Committee on Ways and Means (US Congress) in its latest efforts in the health reforms regarding payments from private payers and its implementation in Medicare has started to explore how private payers are rewarding physicians who provide high quality and efficient care. The report released by the cites the Sustainable Growth Rate (SGR) formula in Medicare Fee-for-service (FFS) as lacking in recognizing the quality of care that is offered by the provider. A report by the U.S National Institute of Health clarifies that in 2004 31% of all outpatient physician income was derived from government sources and this number is set to rise as the reforms ensure health insurance for the remaining 32 million uninsured in the country. This essentially implies that even if Medicare and Medicaid pay a less amount per claim compared to private insurers, more than one-third of physician income is set to come from such government sources.

The inherent advantage that government payers seem to possess is the trust that the government enjoys from the public as well as from beneficiaries such as physicians. Private players bear more risks in terms of bankruptcy and losses compared to government payers. Moreover, Medicare historically accounts for more than 50% of total public spending by the government for US healthcare; this implies that the option of dropping Medicare patients due to any reason does not seem practical financial prudence. Another advantage of Medicare for physicians is that it pays providers roughly the same amount throughout the country regardless of the consumer’s socioeconomic status. Therefore, even though Medicare and Medicaid are faltering, they are still viewed as trustworthy services.

On the other hand Private payers have traditionally created numerous problems for physicians and patients in the form of errors in claim processing, delays in payment, incorrect payments and excessive denial of claims. Private payers at times deliberately commit errors in claims and such errors amount to almost 19% of the claims that are denied for no reason after submission. These claims need to be filed again which takes considerable departmental work and invariably increases costs and delays reimbursements. To deal with both upcoming healthcare reforms affecting government payers and policies of private payers, physicians require assistance of professional departmental processes. Medial billers and coders at not only offer such professional services in the form of denial management and revenue cycle management but also offer traditional medical billing and coding services for better returns.

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