Comparison of Physician Charges and Allowances Under Private Health Insurance Plans and Medicare

HRD-79-111: Published: Sep 6, 1979. Publicly Released: Sep 10, 1979.

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A comparison was made of the actual and allowed charges for physicians at four commercial and two Blue Shield Medicare carriers for their private and Medicare businesses. An assessment was also made of the Department of Health, Education, and Welfare's (HEW) use of a Medicare provision requiring that charges allowed as reasonable under Medicare not be higher than those allowed under Medicare carriers' private business for comparable services and circumstances. This provision was meant to limit program costs.

Physicians charged their private health insurance plan patients less than they charged their Medicare patients in only 9 percent of the cases sampled. In only 7 percent of the cases were the allowed charges under the private plans lower than those allowed under Medicare. Private plan allowed charges usually exceeded Medicare allowed charges by more than 10 percent. In addition, GAO found that HEW was not using the Medicare provision requiring that charges allowed as reasonable under Medicare should not be higher than those allowed under Medicare carriers' private business for comparable services under comparable circumstances. Neither the law nor HEW regulations defined what constituted comparability. Regional offices have received little guidance on this matter.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: The Committee on Ways and Means, Subcommittee on Health, should consider either deleting the comparability language in the law, or defining comparability so that it applies to all private health insurance plans which reimburse on a current reasonable charge basis. GAO believes that the most desirable action would be to delete the comparability language from the law. This would have little, if any, financial effect on the program, and it would remove inconsistencies in program administration and alleviate an ineffective program requirement and the administrative costs associated with it.

 

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