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Office of the Press Secretary

For Immediate Release January 24, 1998

(1) Eliminating Wasteful Excessive Medicare Reimbursement for Drugs. A recent report by the HHS Inspector General found that Medicare currently pays hundreds of millions of dollars more for 22 of the most common and costly drugs than would be paid if market prices were used. For more than one-third of these drugs, Medicare paid more than double the actual average wholesale prices, and in one case paid as high as ten times the amount. This proposal would ensure that Medicare payments are reduced to the actual amount that the drugs cost.

(2) Eliminating Overpayments for Epogen. In a 1997 report, the HHS Office of Inspector General (OIG) found that reducing the Medicare reimbursement for Epogen (a drug used for kidney dialysis patients) to reflect current market prices would result in more than $100 million in savings to the Medicare program and beneficiaries.

(3) Doubling the Number of Audits to Ensure That Medicare Only Reimburses for Appropriate Provider Costs. Right now, not all cost-based providers (e.g., hospitals, home health, non-PPS, skilled nursing facilities) are audited. This proposal would assess a fee to cover all audits and cost settlement activities for health care providers. These steps help ensure that Medicare only makes payments for appropriate provider costs.

(4) Lowering Medicare's Payments for Equipment Through a Nationwide Competitive Pricing Program. Competitive Pricing would let Medicare do what most private and other government health care purchasers do to control cost -- lower costs by injecting competition into the pricing for equipment and non-physician services.

(5) Eliminating Abuse of Medicare's Outpatient Mental Health Benefits. The HHS Inspector General has found abuses in Medicare's outpatient mental health benefit -- in particular, Medicare is sometimes billed for services in inpatient hospitals or homes. This proposal would eliminate this abuse by requiring that these services are only provided in the appropriate treatment setting.

(6) Creating Civil Monetary Penalties for False Certification of the Need for Care. Recent HHS Inspector General reports identified providers who inappropriately certified that beneficiaries needed out-patient mental health benefits and hospice services. This proposal would impose penalties on physicians who falsely certify their patients' need for these two benefits.

(7) Preventing Providers From Taking Advantage of Medicare by Declaring Bankruptcy. Providers who have defrauded and abused Medicare often file for bankruptcy in order to avoid paying fines or returning overpayments, leaving Medicare strapped with the bills. This proposal would give Medicare priority over others when a provider files bankruptcy.

(8) Taking Action to End Illegal Provider Kickback Schemes. A serious area of fraud is kickback schemes, where health care providers unnecessarily send patients for tests or to facilities where the provider is financially rewarded. While we have established criminal penalties for these schemes, additional tools are needed to stamp out this practice: specifically, allowing prosecutors to get a court order to put an immediate halt to such schemes, and to allow civil as well as criminal remedies.

(9) Ensuring Medicare Does Not Pay for Claims Owed by Private Insurers. Too often, Medicare pays claims that are owed by private insurers because Medicare has no way of knowing the private insurer is the primary payer. These proposals would take steps to address these problems including: requiring insurers to report any Medicare beneficiaries they cover; allowing Medicare to recoup double the amount owed by insurers who purposely let Medicare pay claims the group plan should have made; and imposing fines for not reporting no-fault or liability settlements for which Medicare should have been reimbursed.

(10) Enabling Medicare to Capitate Payments for Certain Routine Surgical Procedures Through a Competitive Pricing Process With Providers. This will expand HCFA's current Centers of Excellence demonstration enabling Medicare to receive volume discounts on these surgical procedures and, in return, enabling hospitals to increase their market share and gain clinical expertise.