Predicting Medicare Underpayments Using an LMS algorithm

Ted Shultz

December, 2001

University of Wisconsin

Pro

blem

des

crip

tion

Bill:

Band-Aid $0.12Aspirin $1.04New Hip $1,000.00Gauss $12.00Gloves $3.75-------------------TOTAL $1016.91

MEDICARE

Payment:(no explanation)

-------------Total $412.63

Medicare pays Vanderbilt a different amountVanderbilt Bills Medicare for one amount

Problem Explanation?Why?

Com

pari

son Comparison of Methods:

Never been done before with Medicare!

Simultaneous equations methods:

Inverse matrix methodMuch to large a matrix to inverted on a convention

computer

Orthogonal-triangular decomposition (Matlab backslash operator )

Unable to sort though possible answer to determine optimal solution based on input parameters

Modified LMS methodSlow, but able to bracket answer

LARGE data file (443,964 purchases)

Tec

hniq

ues

Techniques used to handle large data file

•Do all file manipulations in a data base program•Significant time savings

•Bracket weights after each weight recalculation•Know Medicare will pay between 0-100%

•Automatically resize •Start larger, but shrink for accuracy

•Auto save and resume capabilities are required•CAE tethered server crashes every few days

•Requires two days to load and format Matrix! (400Mhz)•Two weeks of calculations (by project definition)

Res

ults

-Con

clus

ions

Only about 1 week of way into calculations

Full reimbursement

Fixed percent

No payment

Still moving ornegotiated rate

Billed amount

Gue

ss p

ay a

mou

nt

Potential to have HUGE impactAbout $32M in charges, $5.5 M in reimbursements