Medicare Part B:

Factors That Contribute to Variation in Denial Rates for Medical Necessity Across Six Carriers

T-PEMD-95-11: Published: Dec 19, 1994. Publicly Released: Dec 19, 1994.

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GAO discussed the Medicare Part B claims processing system, focusing on the: (1) extent of carrier variability in denial rates for lack of medical necessity; and (2) factors that contribute to intercarrier variation. GAO noted that: (1) although rates for some services shifted between 1992 and 1993, carrier denial rates for Medicare Part B claims were generally low and constant over the 2-year period; (2) carriers' medical necessity denial rates varied substantially because of differences in carriers' screening criteria, differences in patient characteristics, variations in billing practices, and different local standards of medical practice; (3) further analysis of denial rates could be useful in identifying billing problems and evaluating how effective Medicare carriers are managing the program and serving beneficiaries and providers; and (4) the Health Care Financing Administration (HCFA) could improve its oversight capabilities by actively monitoring data on carrier denial rates and improving data reliability.

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