Medicare Could Save Billions Using Private Sector's Computer Tools

WASHINGTON, D.C., February 8, 1996 -- Federal administrators could take a major step toward reducing the taxpayer burden of supporting Medicare by embracing off-the-shelf computer tools to screen physicians' claims, a senior Equifax executive testified today.

Nancy Boyer, president of Equifax Healthcare Analytical Services, told a U.S. House subcommittee the federal government already had wasted a minimum of $540 million just since she last testified about the problem last May before the Senate.

The potential savings actually may be more than $2 billion annually, she continued. "We have concluded that for every Medicare recipient, an average of $62 is spent for overused and unnecessary medical services," Boyer told a subcommittee of the House Government Reform and Oversight Committee. "That's $62 times 37 million recipients."

Boyer agreed there are technical, financial and political reasons why the federal government has been slow to act, but asserted the technical and financial obstacles were "straightforward" and easily overcome.

The political obstacles revolve around the Health Care Financing Administration's reliance on 29 regional carrier contractors to process the claims submitted by doctors. Congress and HCFA need to standardize the work of these contractors and dictate national payment policies using commercially available software to identify improper claims before they are paid, she concluded.

"The General Accounting Office believes, and we as clinicians concur, that efficient and consistent medical review of physician claims represents an opportunity for HCFA and the government to achieve real savings in excess of not millions, but billions of dollars per year," Boyer testified. "And that's without decreasing benefits.

"Before mopping up the water, let us take the time to fix the leak."

Rep. Christopher Shays (R-Conn.), chairman of the Human Resources and Intergovernmental Relations Subcommittee, asked Boyer to testify in the wake of an investigation of Medicare payment practices by the General Accounting Office. Using Equifax's AUTO-AUDIT(R), a sophisticated computer program, as part of a comprehensive review of Medicare claims, the GAO documented annual savings of $350 million just with a bare-bones system that used only eight of the available 40 cross-checks.

If all 40 cross-checks were applied, up to $1.5 billion could be saved annually by Medicare based on the experience of commercial customers in the private sector, Boyer added. Applying other features of the automated system and extending it to hospital claims and other areas would save billions more.

"To equate the health arena with the general business world, physicians write over 1 million purchase orders per day," said Boyer. "They are called insurance claims. Analyzing them allows our system to find the 95 percent of practicing physicians who are doing things right."

The other 5 percent are "abusing the privilege of writing a purchase order to the government," Boyer said, and the private sector has the tools that can easily detect such "creative billing."

"We strongly recommend that HCFA mandate the use of commercially available physician claim review technology for the processing of Medicare Part B claims," she said. "The process should be automated now. The time for more study is past."

Boyer, a nurse practitioner with a specialty in geriatric medicine, is a former CEO of a large HMO who co-founded a company named HealthChex in 1988. HealthChex went on to develop AUTO-AUDIT and a physician profiling product known as Peer-A-Med(R) and was acquired by Equifax in 1994.

Equifax Inc. (NYSE: EFX), committed to Global Information Leadership for the Information Age, is the leading provider of information services that help grant credit, authorize and process credit card and check transactions, insure lives and property and control healthcare costs. Established in 1899 in Atlanta, Equifax today employs 14,000 people throughout North and South America, the United Kingdom and continental Europe. Revenues for the 12 months ended Dec. 31, 1995, exceeded $1.6 billion.