Medicare Part B:

Inconsistent Denial Rates for Medical Necessity Across Six Carriers

T-PEMD-94-17: Published: Mar 29, 1994. Publicly Released: Mar 29, 1994.

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Pursuant to a congressional request, GAO discussed the Medicare Part B claims processing system, focusing on the claims denied for lack of medical necessity. GAO noted that: (1) denial rates differ significantly among the six Medicare Part B carriers for 58 of the 71 most requested services; (2) the six carriers' denial rates vary because regional and local carriers have broad authority to interpret medical policy and necessity and differing billing procedures and levels of fraud and abuse; and (3) the Health Care Financing Administration needs to establish medical policies that define medical necessities and oversee carriers' claims review activities to better ensure that beneficiaries and providers are equitably treated.

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