August 2007 Newsletter

OIG Declines to Promulgate Excessive Charge Final Rule

By: Corporate Compliance Officer

On June 18, 2007, the Office of Inspector General (OIG) withdrew its 2003 proposed rule which endeavored to define what comprised “excessive charges” to Medicare and Medicaid. The OIG wanted to use the proposal to add weight to the “discriminatory” billing prohibition of the Social Security Act (SSA) that allows them to exclude providers from the Medicare and Medicaid programs for overcharging these programs. Numerous times in the past, the OIG has attempted to sharply define the terms “substantially in excess,” “usual charges,” and “good cause” that are in the SSA.

The Proposed Rule:

• Defined “substantially in excess” as any charge that was more than 120 percent of the usual charge.
• “Usual charges” would have been based on either a provider’s average charge or a median charge and would have included amounts billed to cash-paying patients and patients covered by indemnity insurers with which the provider had no contractual relationship.
• These “usual charges” would also have included any fee-for-service rates that a provider agreed to accept from any payer, including discounted rates negotiated with managed care plans.

Why the OIG Withdrew the Rule:

• Lacked sufficient information to impose the 120 percent standard across the board.
• Could not assure “that a final rule would not have the unintended effect of increasing healthcare costs across the industry.”

The OIG still remains concerned about disparities in the amounts charged to Medicare and Medicaid when compared to private payers and will continue to evaluate billing patterns of individuals and entities on a case by case basis. http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket. access.gpo.gov/2007/pdf/E7-11663.pdf