OIG to providers: Don’t gouge Medicare

Friday, October 31, 2003

WASHINGTON - The OIG has set the stage to go after providers who charge Medicare “substantially in excess” of what they charge private insurers.

In September, the OIG proposed a new rule that clarified “substantially in excess” as a charge 20% greater than a provider’s “usual charge” or the amount they charge other payers. Since about 1990, The OIG has had the authority to exclude providers who charge Medicare substantially in excess of their usual charges. But until now the OIG had never define substantially in excess nor had it excluded a provider under this provision, said Vicki Robinson, chief of the OIG’s industry guidance branch.

“What we are suggesting here is that if you choose to keep billing us more while billing everyone else substantially less, we may choose not to do business with you,” said Robinson.

Medicare reimburses the lesser of the fee schedule price or the actual charge, the amount a provider charges on the bill. The OIG used anecdotal and factual cases to define substantially in excess as 20% above a provider’s usual charge, Robinson said.

As for the prevalence of providers charging Medicare substantially in excess, Robinson said: “I don’t think we would have put the time and effort into this if we didn’t think there was a reason.”

As proposed, if a provider’s actual charge for non-Medicare payers is 20% less than what he charges Medicare, the OIG could deem his Medicare charges “substantially in excess.”

The notice proposes two methods of calculating a provider’s “usual charge.” One method would examine the provider’s average charge for an item during 12 months. The second proposal would take the median charge for an item during a 12 month period.

Interested parties have until Nov. 14 to comment on the proposed rule.

One of those interested parties is AAHomecare.

“You can’t compare the cost of doing business with patients under Medicare versus patients who are paying cash for items or patients who fall under a managed care program,” said Penelope Solis, AAHomecare’s manager of regulatory affairs.

AAHomecare and other industry watchers claim that doing business with Medicare is more expensive because of the burdensome paperwork requirements.

“They have to realize that there are a lot more regulations that come with Medicare than with most other payers,” said Lisa Smith, a healthcare attorney with Brown & Fortunato in Amarillo, Texas. “There is a lot more documentation, a lot more hoops to jump through to be a Medicare provider. With other insurers, you give price breaks in exchange for patient steerage, which you are not getting outside of Medicare managed care.”

The OIG realizes that Medicare can be a more expensive payor and encourages providers to provide evidence to support that perspective in their comments, Robinson said.

“We take the public comments serious,” Robinson said.

“We read them all.”