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December 7, 1998

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For more than 30 years, Medicare has been much more than a government program. It has been a way for us to honor our obligations to our parents and grandparents. Medicare is an expression of the old and profound American belief that the bonds of mutual love and support between the generations must remain strong. Any threat to Medicare is a threat to these sacred bonds.

President Clinton
December 7, 1998

Today, at a White House event, President Clinton unveils a new legislative package that will save Medicare over $2 billion by combating fraud, waste and abuse. In addition, the President announces new administrative efforts to ensure that Medicare contractors are cracking down on fraudulent activities.

NEW LEGISLATIVE PACKAGE TO SAVE MEDICARE. President Clinton will send Congress a comprehensive legislative package to fight fraud, waste and abuse in the Medicare program as part of his FY 2000 budget. The President's proposals, which will give HCFA more tools to root out fraud in the Medicare system, include:

  • Eliminating Excessive Medicare Reimbursement for Drugs. A recent report by the HHS Office of Inspector General (OIG) confirms that Medicare pays hundreds of millions of dollars more for common and costly drugs than it would if it used market prices. The Administration's proposal bases Medicare payments on the actual acquisition cost of these drugs to the provider, eliminating mark-ups and substantially reducing Medicare costs.
  • Ending Overpayments for Epogen. An OIG report found that the current reimbursement rate exceeds the current cost of the drug by at least 10 percent. This proposal reduces Medicare reimbursement to reflect current market prices.
  • Preventing Abuse of Medicare's Partial Hospitalization Benefit. A recent OIG report found that providers are abusing Medicare by billing for partial hospitalization services that were never given or provided to fewer patients than billed for by providers. This proposal ensures that Medicare only reimburses for services actually given by placing stricter controls on the provision of services.
  • Ensuring Medicare Does Not Pay for Claims Owed by Private Insurers. Private insurers of working Medicare beneficiaries are required by law to be the primary payer of health claims, but private insurers do not always pay these claims. This proposal requires private insurers to report all Medicare beneficiaries they insure to HCFA and gives HCFA greater authority to fine these insurers.
  • Empowering Medicare to Purchase Cost-Effective High-Quality Health Care. Presently, Medicare has limited authority to contract out with institutions that have a track record of providing high-quality care at a reasonable price. This proposal expands this authority to urban areas that have multiple providers, which will enable Medicare to provide high-quality care at less cost.
  • Requesting New Authority to Enhance Contractor Performance. HCFA does not have the authority it needs to terminate contractors who do not effectively perform their duties. This proposal would give HCFA authority to contract with a wider range of carriers and terminate them if they necessary. It would also have greater authority to oversee contractor performance.

NEW ACTIONS TO HELP ENSURE MEDICARE CONTRACTORS FIGHT FRAUD. The President's announcements about new administrative efforts to ensure contractors are cracking down on fraud and abuse include:

  • Contracting with Special Fraud Surveillance Units to Ensure Detection of Fraudulent Activities. OIG reports show many Medicare contractors do a poor job of investigating fraud. The Administration fought to include in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) new authority to contract with specialized fraud surveillance units or "fraud fighters," which are better equipped to audit cost reports and conduct activities to detect fraud. The first fraud unit will begin this spring.
  • Implementing the Competitive Bidding Demonstration for Durable Medical Equipment. The OIG found that Medicare rates for hospital beds are higher than rates paid by other payers. HCFA will begin a demonstration this spring that will use competitive bidding to decrease payments for hospital beds and other medical equipment, which will lower Medicare costs.
  • Requiring Contractors to Report Fraud Complaints to OIG Immediately. Many contractors defer reporting cases of suspected fraud to the OIG when the dollar amounts are low. This month, HCFA will send memorandums to all contractors requiring them to refer cases of suspected fraud to the OIG immediately, regardless of the amount of money involved.
  • Announcing New Comprehensive Plan to Fight Fraud and Abuse. By early next year, HCFA will release a new Comprehensive Plan for Program Integrity to improve efforts to cut down on fraud and abuse. This plan will outline new strategies to fight fraud, including the enhanced use of audits and improved management tools.

BUILDING ON A COMMITMENT TO FIGHTING FRAUD, WASTE AND ABUSE. The President's announcements today build on the Administration's longstanding commitment to cracking down on fraud, waste and abuse in the Medicare system. Since 1993, the Administration's efforts have saved taxpayers more than $20 billion, with health care fraud convictions increasing by more than 240 percent.

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