Creative Bookkeeping at Medicare

One more reason I do not want government-only healthcare.

According to the "Medicare Learning News," (a pdf document) no payments will be made to Medicare "providers" (doctors, hospitals, pharmacies, and the intermediate insurance companies with which the government contracts to "manage" Medicare) for the last 9 days of the fiscal year, September 22 to September 30, 2006. The payments will go out in a batch on October 2, 2006.

This planned "hold" will not affect Social Security or your Senators' and Representatives' health plans. I do plan to watch the pork barrel giveaways more closely between now and the election.

This means that the insurance companies who manage payments from Medicare as they filter back to your doctors, pharmacies, hospitals and all sorts of groups "downstream" will wait longer to be paid for work and supplies that they have already provided to Medicare, Medicaid and TriCare patients during those 9 days. They will have to plan ahead to cover their own bills during the lull.

The first day of the fiscal year for government funded agencies and grants is October 1st. September tends to be an "interesting" month for the bookkeepers of recipients of government money: some have run out of their Federal funds, and others have money that they must spend or lose. The conventional wisdom that I've heard is that if you don't spend it, you won't get your full grant next time -- and someone may come around to ask why the grant was inflated in the first place.

(Shouldn't there be some sort of award, rather than penalty? I never knew of anyone who actually tested this out.)

Many of the stories that I've heard about grants and budgets concern shopping sprees in September in order to spend every last dime, within the limits of the charter or grant. No one wants to risk next year's grant or an audit, so purchases of office supplies, computers and peripheral office machines increase and store rooms fill.

However, some agencies run out of money or never seem to have enough money allocated in the first place. And then there are those with planned shortages. Medicare is one of those agencies this year.

Medicare, along with Social Securty, is funded by specific taxes taken from payroll -- that "FICA" on your check stub -- before those checks are written to employees. The employer matches the employee's portion, so that employers send off checks equal to about 13% of the salary of each employee to Washington each payday. (Larger employers are required to file electronically, so that money is automatically withdrawn from their bank accounts and sent to Washington. Smaller businesses send checks each payday, through their banks.)

The trouble, I think, is that the Medicare and Social Security money is dumped into and re-distributed through the general Federal budget each year. Maybe you've heard about the "lock box" that doesn't exist: All that money that should be earmarked for healthcare and Social Security payments - for work already done and promises already kept on one side - is used just like the income tax money - for "pork barrel" projects as well as legitimate promise-keeping. No penalties, no interest will be paid.

There's also the problem that the money is redistributed through companies like Blue Cross, United Health Group, and Cigna, companies which must make a profit and pay high-salaried CEO's. United Health Group, for instance, paid its CEO, William McGuire, MD, $124 Million last year, not including his stock options that total as high as $1 to $2 Billion, depending on the date Dr. McGuire is able to put on those options.