Government seeks to end fraud and abuse of Medicare

In response to a government report that Medicare overpaid almost $450 million for 22 prescription medicines in 1996, President Clinton issued legislative proposals to combat fraud, waste and abuse of the Medicare system.

The report, issued last December by the Health and Human Services Office of Inspector General, Washington, found that Medicare paid more than double the actual average wholesale prices for more than a third of the 22 products, and paid nearly ten times the actual average wholesale value of one product.

Clinton proposed that Medicare payments be based on the actual amount that drugs cost.

He also proposed eliminating overpayments for the kidney dialysis product Epogen. Reducing Medicare reimbursements for this product to reflect current market prices could save the Medicare program as much as $100 million.

Providers who inappropriately certify that beneficiaries need out-patient mental health benefits and hospice services should suffer civil monetary penalties, the president said.

Clinton pushed for stronger housekeeping on the part of the Health Care Financing Administration. They should double the number of audits of Medicare cost-based providers by assessing a fee to cover audits and cost-settlement activities for providers.

HCFA should also lower Medicare payments by way of a national competitive pricing program, the president said. This would create a competitive pricing environment for Medicare such as that enjoyed by private health care purchasers.

To crack down on providers who try to dodge repaying debts to Medicare, Clinton proposed giving Medicare repayment priority when providers declare bankruptcy.

Providers who unnecessarily and illegally send patients for tests or to facilities where the providers are financially rewarded would be penalized on both criminal and civil levels.

Clinton also suggested that private insurers should be required to report any Medicare beneficiaries in their plans. Under Clinton's plan, insurers who fraudulently allow Medicare to cover expenses owed by the insurers would be fined double the amount owed. PR