Attached is our Client Alert regarding the OIG’s proposed rule concerning submitting Medicare claims containing excessive charges.  As you will note, the focus of the Alert deals mainly with the proposed methodology to calculate the usual charge.  Based on preliminary discussions with a number of our clients, they believe it will be exceptionally difficult to collect information in order to determine whether they are submitting a Medicare claim substantially in excess of its usual charge.

The proposed methodology to compute “usual charges” presumes that hospital and group practice business offices will be able to calculate, track, and monitor net revenue per test for more than 1,000 clinical laboratory tests from hundreds of payors.  The proposed methodology also presumes that each hospital and group practice will organize information in the same way even though, in our experience, there are significant differences in the manner each client records and tracks laboratory test volume, charges, and discounts.  The lack of parity of collected information may result in inequitable Medicare/Medicaid payments.

We also raise the question of how the proposed 120% benchmark of “substantially in excess” of the usual charge was derived.  We note that the explanation described in the proposed rule is vague, and is open to critical view.

The Client Alert observes that the OIG clarifies that higher Medicare/Medicaid billing and collection costs may be a “good cause” for higher Medicare charges than the usual charge to other payors.  However, in preliminary discussions with several clients, each had a dramatically different approach about on how they would estimate billing/collection costs associated with Medicare/Medicaid versus other payors.  There are many factors that may influence billing/collection costs, and the proposed rule is moot on this issue.

We are organizing a survey to evaluate the impact the proposed rule may have on our clients.  We hope to have the survey responses tabulated by the end of October, and will send you a copy of the analysis at that time.

After you have reviewed the Client Alert, please call me (847) 498-1122, or email me (consult@hcdsinc.com) with any questions or comments.