OIG to providers: Don’t gouge Medicare

Sunday, September 21, 2003

September 22, 2003

WASHINGTON - The OIG published a proposed Medicare rule change in the Federal Register recently that would bolster its power to exclude providers from the program.

The notice proposes two distinct methods of calculating a provider’s “usual charge."The first method would examine the provider’s average charge for an item during 12 months while the second proposal would take the median charge for an item during a 12 month period. Under both proposals, the OIG at its discretion could determine that the charges for an item were “substantially in excess"if the charges or costs are greater than 120% of the providers "usual charge."In that case, the OIG could take steps to exclude the provider.

Medicare reimburses the lesser of the fee schedule price or the actual charge, the amount a provider says a product costs. If a provider’s actual charge for non-Medicare payers is 20% less than what he charges Medicare, his Medicare charges could be deemed “substantially in excess."The notice states that the OIG should have flexibility in determining when a provider may charge Medicare or Medicaid an amount that is substantially in excess of their usual costs. For example, the OIG acknowledges that some delays in claims processing and denial of claims may result in higher charges.

However the burden of proof would be placed on the provider to show that entity falls within the good cause exception.