Savings Possible by Modifying Medicare's Waiver of Liability Rules

HRD-83-38: Published: Mar 4, 1983. Publicly Released: Mar 4, 1983.

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GAO reported on proposed legislation to modify Medicare's waiver of liability provision with respect to payments to hospitals, skilled nursing facilities, and home health agencies. The waiver of liability provision protects both beneficiaries and providers from having to pay for services they receive that Medicare will not pay for. The Administration proposed legislation that would delete the authorization to waive provider liability for claims for services submitted under the Medicare part A program. Under the proposal, health care providers would no longer be paid when Medicare determined that a service was medically unreasonable, unnecessary, or custodial in nature. The proposal would not affect the protection afforded beneficiaries.

GAO believes that, while the proposed legislation would achieve the Administration's goal of savings and establish provider incentives, it is not needed. In addition, the proposed legislation does not take into consideration provider concerns. GAO found that there are several ways to achieve savings without amending Medicare law. The Health Care Financing Administration (HCFA) currently presumes that beneficiaries and providers did not know that payment would be denied unless there is evidence to the contrary. All of the savings methods identified by GAO would modify the provider's presumptive status, but the provider would retain the right to appeal for waiver: (1) HCFA could eliminate the presumption and the applicability of the waiver provision could be determined on a case-by-case basis; (2) the denial rate criteria used to determine presumed eligibility for waiver of liability could be tightened; or (3) the method for establishing whether a provider is presumed eligible for a waiver could be changed.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: HCFA issued regulations in February 1986 which implemented this recommendation.

    Recommendation: The Secretary of Health and Human Services (HHS) should direct the Administrator, HCFA, to establish more stringent eligibility requirements for the application of waiver of liability for health care providers under part A of Medicare.

    Agency Affected: Department of Health and Human Services


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