Medicare

GAO discussed the appropriateness of Medicare fee schedules for durable medical equipment (DME). GAO noted that: (1) Medicare carriers' fee schedules varied greatly from state to state; (2) for 95 percent of the products, the highest fee schedule amount was at least twice as much as the lowest, and for over 40 percent of the products, the highest amount was at least six times as much as the lowest; (3) in its fiscal year (FY) 1991 budget proposal, the Health Care Financing Administration (HCFA) proposed several DME fee schedule changes that could save approximately $240 million; (4) the fee schedule changes included capping fee schedules, rebasing fee schedules, and reducing and limiting payments; (5) if HCFA capped payments at the national median, payments would decrease in carrier areas where payments were relatively high, and would not adversely affect those areas with relatively low payment rates; and (6) in 1986, HCFA capped Medicare fee schedules for clinical diagnostic laboratory procedures at rates based on the national median. GAO believes that HCFA proposals to rebase the fee schedule for other DME and to place rental payment limits for items requiring frequent or substantial servicing also have merit.