OIG Withdraws Proposed Rule Based on ‘Substantially in Excess’

WASHINGTON–After considering public input, the HHS Office of
Inspector General has withdrawn a Medicare exclusion rule proposed
in 2003.

The rule, originally proposed Sept. 15, 2003, sought to
establish the OIG’s authority to exclude individuals or entities
from Medicare if they charged the program “substantially in excess”
of usual charges for items or services. The rule defined charges 20
percent higher than elsewhere in the marketplace as excessive,
saying that differential was “high enough that most people would
agree that the charges to Medicare are substantially in
excess.”

But in its withdrawal notice, the OIG concluded that it did “not
have sufficient information to establish a single, fixed numerical
benchmark for ‘substantially in excess’ that could be applied
equitably across health care sectors and across items and services,
as we originally proposed.”

While some of the 323 commenters supported the proposed rule,
the OIG said others argued that its definitions were arbitrary and
unworkable. Several commenters said the rule might have the
unintended consequence of increasing health care costs, explaining
that to comply with the rule, providers that were charging Medicare
in excess of the 120 percent benchmark might opt to raise their
prices to other payers rather than lowering their charges to
Medicare.

The OIG said it “remains concerned about disparities in the
amounts charged to Medicare and Medicaid when compared to private
payers,” but at this time it will continue to evaluate billing
patterns on a case-by-case basis.

To view the withdrawal notice, published in the June 18
Federal Register, click here.