How do you define 'substantially in excess'?

Sunday, June 24, 2007

WASHINGTON - The OIG raised the white flag last week, admitting it had no idea how to determine when providers charge Medicare too much for products and services.

In a notice filed June 18 in the Federal Register, the OIG stated:

"We have concluded that we do not have sufficient information at this time to establish a single, fixed numerical benchmark for 'substantially in excess' that could be applied equitably across healthcare sectors and across items and services, as we originally proposed."

In a proposed rule issued in 2003, the OIG indicated that it would consider a claim "substantially in excess" if a provider charged Medicare 20% or more than what other customers usually paid for the same product. The impetus for this: to prevent providers from gouging Medicare.

But as times change and providers look to offset Medicare reimbursement cuts by boosting cash sales, "substantially in excess" begins to look more and more "antiquated," said Jeff Baird, a healthcare attorney with Brown & Fortunato in Amarillo, Texas.

That's especially true as retired baby boomers, many of whom have managed to accumulate a healthy retirement, willingly pay cash for more and more items. Providers can often charge cash customers less--sometimes much less--because they save money by not having to bill Medicare, Baird said.

"Medicare is going pay what they are going to pay, and (providers) ought to be able to sell items to cash customers for whatever they want to sell them for," Baird said.

While the OIG has given up trying to define substantially in excess, the regulation, vague as it is, still applies. With that in mind, Baird offered the following rule of thumb: The OIG probably won't be too concerned if a provider discounts a product 20% or less than the Medicare allowable. But for discounts more than 20%, providers should be able to document the cost savings.