Inquiry About Alleged Discriminatory Medicare Part B Reimbursement in New Jersey

HRD-82-58: Published: Apr 19, 1982. Publicly Released: May 10, 1982.

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In response to a congressional request, GAO studied allegations of discriminatory rate reimbursement to New Jersey senior citizens under the Supplementary Medical Insurance Program, Medicare part B.

GAO found that, although beneficiaries in New Jersey are paying a substantial portion of their medical costs for services which are covered by part B, on the average they are no worse off than beneficiaries elsewhere in the Nation. The level of reimbursement for benefits within the State is affected by reimbursement localities, that is, the different areas within the State for which maximum payment levels are set. While current charge data suggest that changes might be warranted in the locality designations, such changes would likely help some beneficiaries and hurt others financially. Medicare law limits the reasonable charge for a particular service to the lowest of the: (1) provider's actual charge; (2) provider's customary charge; or (3) prevailing charge for the service in the area where it was provided. New Jersey's carrier, which is responsible for determining the reasonable charges for services, uses an economic index to determine these rates. In one New Jersey locality, the prevailing charges for 16 of 30 common procedures performed by general practitioners was lower because of the application of an economic index than they would have been if based on the 75th percentile of current charges. For specialists, the economic index limited the prevailing charges for 49 of 75 common procedures. The impact of the economic index on New Jersey beneficiaries does not appear to be much different than it is in other States, and GAO found no errors in the 42 reasonable charge levels it checked.

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