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Note from Hugh

Medicare Weekly Update, June 19, 2007

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How many of you recall the OIG proposing to determine a provider's "usual charge" by taking into account discounts offered to other insurers, including managed care and Tri-care? This was part of an effort by the OIG to define two important terms in their authority to exclude entities that submit claims to Medicare or Medicaid "containing charges or costs that are substantially in excess of such entity's usual charges or costs." In that same proposed rule, the OIG also proposed to set a benchmark of 120% of the "usual charge" as "substantially in excess."

The original proposal created a great deal of fervor primarily due to the administrative burdens it would have imposed on providers. Based on comments they received, the OIG withdrew their proposal on June 18. See note below under "CMS Regulations."

The OIG was careful to note that they were not withdrawing prior guidance on how to treat discounts for uninsured and underinsured patients when calculating "usual charge." The OIG emphasized that they will continue to follow the long standing OIG policy that a provider need not include free or reduced charges to uninsured and underinsured patients when calculating their "usual charge" for an item or service. In addition the OIG published an Addendum to their February 2004 guidance, "Hospital Discounts to Patients Who Cannot Afford to Pay their Hospital Bills." 

This withdrawal, of course, does not affect the OIG's authority to exclude provides who do submit charges or costs in excess of their usual charges or costs. The withdrawal only affects the definitions that the OIG proposed to use to determine when a provider did so. The OIG emphasized that they will continue to evaluate on a case by case basis the billing patterns of entities to determine if they are in violation of this regulation.

~ Kimberly Anderwood Hoy, Esq.

Editor's Note: Kimberly Anderwood Hoy, director of Medicare and compliance for HCPro, is the author of this week's "Note from Hugh" in Mr. Aaron's absence.

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