DQOTD: Why does 'what Medicare paid' vary wildly between Medicare and Medigap?

[Midpack]

I'd noticed in the past that what Medicare approved and what Medicare paid are usually MUCH less than what any provider submitted as charges - but I never studied them closely. I recently had a more involved treatment, and noticed that for every claim submitted what Medicare approved and paid are FAR less than what Mutual of Omaha says Medicare paid. Overall Medicare says they paid about 12% of amount charged (about what I thought I'd seen in past years), whereas Mutual of Omaha says Medicare paid 89%. Which is right and why the HUGE difference? BTW my Mutual of Omaha Plan G paid 2.6% - and the providers have just eaten the (about 8%) difference as far as I can tell.

Edit I know how Medicare negotiated rates work, it’s the 7.4X paid discrepancy I’m wondering about.

 

[folivier]

Could it be the doctors and other providers are inflating their prices knowing they'll be paid much less thus giving them tax breaks?

 

[audreyh1]

Sounds like MoA is showing the original charges, not the Medicare approved charges of which MoA only pays the remaining 20%.

 

[GalaxyBoy]

Even under private group insurance this was the status quo. DW had surgery a number of years ago and the amount paid to the doctor by insurance was about half of what the hospital charged. Which told me that if you didn't have insurance at all, you were doubly screwed.

 

[dixonge]

I'd noticed in the past that what Medicare approved and what Medicare paid are usually MUCH less than what any provider submitted as charges - but I never studied them closely. I recently had a more involved treatment, and noticed that for every claim submitted what Medicare approved and paid are FAR less than what Mutual of Omaha says Medicare paid. Overall Medicare says they paid about 12% of amount charged (about what I thought I'd seen in past years), whereas Mutual of Omaha says Medicare paid 89%. Which is right and why the HUGE difference? BTW my Mutual of Omaha Plan G paid 2.6% - and the providers have just eaten the (about 8%) difference as far as I can tell.

Medicare is paying 12% of what they were billed, and MoA is saying that they paid 89% of what were approved charges?

¯\_(ツ)_/¯

 

[Midpack]

Medicare is paying 12% of what they were billed, and MoA is saying that they paid 89% of what were approved charges?

¯\_(ツ)_/¯

No, note Word now in red.

 

[EastWest Gal]

This is exactly how the insurance system has worked in this country for decades. There are Medicare rates that are set by the government. Private insurance pays a higher amount; significantly higher for hospital based services, and about 140% higher for physician services. Medicaid pays less than Medicare. However, each insurance company negotiates the rates with each provider and each hospital system. All of these amounts are lower than what they charge. Now, hospital systems publish their charged amounts, but none of these amounts are what anyone actually pays. If you have to pay cash, negotiate.

 

[Midpack]

Sounds like MoA is showing the original charges, not the Medicare approved charges of which MoA only pays the remaining 20%.

Could be, but MoO shows Amount Charged, Medicare Approved, Medicare Paid, Mutual of Omaha Paid and Amount Owed (me). The amount MoO shows as Medicare paid is about 7.4x what my Medicare acct shows they paid? That’s my question. I assume what Medicare says they paid is right and what MoO shows (Medicare paid) is wrong. But off by 7.4X!!!

I know how Medicare negotiated rates work, it’s the 7.4X paid discrepancy I’m wondering about.

 

[dixonge]

No, note Word now in red.

That is what I was attempting to say, unsuccessfully, obviously

The details on your MoO bill rule that out though. Interesting.

 

[MichaelB]

Could be, but MoO shows Amount Charged, Medicare Approved, Medicare Paid, Mutual of Omaha Paid and Amount Owed (me). The amount MoO shows as Medicare paid is about 7.4x what my Medicare acct shows they paid? That’s my question. I assume what Medicare says they paid is right and what MoO shows (Medicare paid) is wrong. But off by 7.4X!!!

I know how Medicare negotiated rates work, it’s the 7.4X paid discrepancy I’m wondering about.

Are they both using the same base number? Is the MoO comparing the original billed price vs what Medicare paid, while Medicare is comparing the adjusted or accepted price and then comparing with what was paid?
edit - this was audreyh1’s point, which she made more succinctly.

 

[Jerry1]

Sounds like MoA is showing the original charges, not the Medicare approved charges of which MoA only pays the remaining 20%.

^^This^^
MoA is saying that Medicare paid X but X is really a charge based number. It would be more appropriate to say that Medicare Covered 89% of the charges. I've been away from it for a while, but there's a few definitions of Charges and by "clearing" or "satisfying" a certain amount of charges MoA is saying that Medicare "paid" that amount. They didn't. Definitions aside, I can assure you that MoA is speaking of Charges and not what Medicare actually paid. What Medicare said they paid is what the provider received from Medicare.

 

[Midpack]

Are they both using the same base number? Is the MoO comparing the original billed price vs what Medicare paid, while Medicare is comparing the adjusted or accepted price and then comparing with what was paid?
edit - this was audreyh1’s point, which she made more succinctly.

Yes, both show the exact same “Amount Charged” and "Medicare Approved" amount. I’ll try to post example Medicare and Mutual of Omaha EOB’s to show all the numbers but I’m at a matinee until later…and here it is.

I assume Medicare actually paid what Medicare EOB shows. Why on earth does Mutual of Omaha shows Medicare paid 11.8X's as much (presumably false)? Every one of the two dozen EOB pairs show a similarly large discrepancy...

As am aside, few if any of the EOB's I've gotten in the past showed Medicare Approved equal to Amount Charged! Another curiosity.

 

[sengsational]

It always annoyed me the way insurance companies try to make it seem like the difference between the rack-rate and the negotiated rate was "paid" by the insurance company. If anybody "paid", it was the service provider, who accepted a lower rate.

There is "sequestration", that I learned about a while back: UHC/AARP Small Discrepancies in Approved and Paid?

But that's only 2% that the provider has to "eat".

 

[ivinsfan]

Our benefits statement show...Medicare approved amount X then you see several "adjustments " such as Yada Yada, federal law cap is Y.. or this is a charge included in previous billing code so minus that number. You can literally see half a page of footnotes, each indicates a charge lowered by Medicare



So those charges just disappear. No one pays them. This is the main reason we will not leave a traditional supplement plan. Tens of thousand dollars ofcharges from my DH major heart surgery literally vanished . It's an odd system.

 

[Koolau]

The whole system needs more transparency - I keep hearing that's in the w*rks. I'll believe it when I see it so YMMV.

 

[Telly]

MOO, hahaha, NO!

For Original Medicare, my Medicare EOB/MSN/ESN whatever it is, shows:
What the Provider Charged,
What Medicare Allowed (much lower of course!),
What Medicare Paid.
The "Medicare Paid" amount runs around 80% of the "Medicare Allowed", makes sense.

My Non-MOO Plan N shows what Medicare Paid, then shows what Plan N paid. It all makes sense and is clear.

As to why MOO is portraying wrong information, can't help.

 

[Midpack]

MOO, hahaha, NO!

For Original Medicare, my Medicare EOB/MSN/ESN whatever it is, shows:
What the Provider Charged,
What Medicare Allowed (much lower of course!),
What Medicare Paid.
The "Medicare Paid" amount runs around 80% of the "Medicare Allowed", makes sense.

My Non-MOO Plan N shows what Medicare Paid, then shows what Plan N paid. It all makes sense and is clear.

As to why MOO is portraying wrong information, can't help.

Usually true IME but look at post #12. Medicare approved the full amount much to my surprise - but then paid about 8% of that? So you’re “around 80%” assumption does not hold - though I’ll agree it seemed to in the past in my experience too.

As for my original question, what’s up with the Medicare paid amount MoO shows, I’ll just ignore that from now on - has to be nonsense.

 

[MBSC]

This is an outpatient hospital claim paid by OPPS (Outpatient Prospective Payment System). The OPPS pricer determines the Medicare payment only for medical services. Therefore, the first step is to remove non-medical charges (TV in room charge) from the billed charges. The result is posted in the Medicare Approved Amount field on the MSN. In this example, there are no non-medical charges, so the Approved Amount equals the Total Charges.

You have to reverse engineer the payments if you want to calculate the actual approved amount. I'm not a math expert so I'm not saying this is the right way to do it. (assumes Part B deductible has been met)

$338.95/0.20 coinsurance = $1694.75
$1694.75 * 0.78 = $1321.90 (The 2% sequestration was explained in post #13).

$1328.63 - $1321.90 = $6.73 unaccounted for (such as covered diagnostic lab being exempt from the Part B deductible and 20% coinsurance as explained here)

$6.73/0.98 = $6.87

$1694.75 + $6.87 = $1701.62 approved amount (or something like that)

Post #11 correctly explains that $15,717.05 is simply the total charges less the amount MOO paid.

 

[Midpack]

This is an outpatient hospital claim paid by OPPS (Outpatient Prospective Payment System). The OPPS pricer determines the Medicare payment only for medical services. Therefore, the first step is to remove non-medical charges (TV in room charge) from the billed charges. The result is posted in the Medicare Approved Amount field on the MSN. In this example, there are no non-medical charges, so the Approved Amount equals the Total Charges.

You have to reverse engineer the payments if you want to calculate the actual approved amount. I'm not a math expert so I'm not saying this is the right way to do it. (assumes Part B deductible has been met)

$338.95/0.20 coinsurance = $1694.75
$1694.75 * 0.78 = $1321.90 (The 2% sequestration was explained in post #13).

$1328.63 - $1321.90 = $6.73 unaccounted for (such as covered diagnostic lab being exempt from the Part B deductible and 20% coinsurance as explained here)

$6.73/0.98 = $6.87

$1694.75 + $6.87 = $1701.62 approved amount (or something like that)

Post #11 correctly explains that $15,717.05 is simply the total charges less the amount MOO paid.

Wow, thanks. Tells me a lot I didn't know. But I know to ignore whatever MoO tells me what "Medicare Paid."

 

[marko]

Could it be the doctors and other providers are inflating their prices knowing they'll be paid much less thus giving them tax breaks?

I do find it interesting that my urologist and DWs orthopedic guy both charge Medicare the exact same amount ($568) for an office visit.

I once complained to an ambulance company who charged my brother an insane amount to drive him 3 miles to the hospital. The nice lady told me that they overcharge knowing they'll actually get a much smaller percentage. "If we only charged $300 we'd end up getting $20 from insurance or Medicare"

 

[FIREchief]

So those charges just disappear. No one pays them. This is the main reason we will not leave a traditional supplement plan.

Why would this have anything to do with the choice of Medigap vs. Advantage?

 

[ivinsfan]

Firechief your question involves a long complicated answer about different medicare supplements. instead of medigap use the word medicare and search this forum. That will explain it a little better. I live in a state that offers a different mix of plans so the national plans will be different.

 

[FIREchief]

Firechief your question involves a long complicated answer about different medicare supplements. instead of medigap use the word medicare and search this forum. That will explain it a little better. I live in a state that offers a different mix of plans so the national plans will be different.

I just noticed that I misread your earlier post. I misunderstood it to say you would not use a Medigap plan. My bad! I'm am 100% certain that I will enroll in a G-HD plan later this year. I'm just trying to decide which company to use. I think it will be United American or Physicians Select (Physicians Mutual).

 

[a60dan]

Yes, both show the exact same “Amount Charged” and "Medicare Approved" amount. I’ll try to post example Medicare and Mutual of Omaha EOB’s to show all the numbers but I’m at a matinee until later…and here it is.

I assume Medicare actually paid what Medicare EOB shows. Why on earth does Mutual of Omaha shows Medicare paid 11.8X's as much (presumably false)? Every one of the two dozen EOB pairs show a similarly large discrepancy...

As am aside, few if any of the EOB's I've gotten in the past showed Medicare Approved equal to Amount Charged! Another curiosity.
View attachment 54552

Are these part A (hospital with ~$1600 Medicare deductible) or part B (outpatient with ~$257 deductible)?

In February you might be seeing deductibles coming into play but that should appear as “you pay”.