Medicare will be forced to delay payments to beneficiaries, doctors and hospitals substantially this year unless the Office of Management and Budget releases $101.3 million from a contingency fund to supplement program administrative funds, Medicare officials have warned insurance companies that help process claims.
The Blue Cross and Blue Shield Association estimated that unless the extra money is released by next fall elderly persons filing reimbursement claims for a doctor bill will have to wait an average of 66 days instead of the current 17-day average. Doctors billing the program will have to wait equally long, the association calculated.
The organization estimated that hospitals and nursing homes will have to wait 36 days for payment instead of the current 17-day average.
The need for the contingency funds was disclosed in a letter from Barbara Gagel, director of the Medicare Bureau of Program Operations, to Blue Cross/Blue Shield, Aetna Life & Casualty Insurance Co. and other large insurance groups that Medicare pays to help it administer the program and process bills.
Gagel said the president requested $1.446 billion for fiscal 1991 to cover the administrative costs for those groups; Congress appropriated $1.419 billion and also set aside a contingency fund of $133 million that can be used only if the OMB releases the money.
Gagel said that unanticipated workloads, resulting from legislative changes in the program, plus a higher claims volume, will increase fiscal 1991 administrative costs and create a need for release of $101.3 million from the contingency fund to avoid payment delays. She told the insurance groups to start planning on a slowdown in case the funds do not become available.
Gail Wilensky, administrator of the Medicare and Medicaid programs, said in an interview, "We remain hopeful the money will be released, but at the moment we have not gotten agreement to have it released and we felt we should notify" the insurance groups. "We are very concerned about this, but we have to conduct business in a prudent manner."
Blue Cross/Blue Shield officials, in revealing Gagel's warning, said that not only would payments be delayed but Medicare ultimately would have to pay $81 million more in reimbursements to cover the 1991 bills because it must pay interest when it delays payments too long.