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Pursuant to a congressional request, GAO evaluated the probable effects of implementing certain Department of Health and Human Services (HHS) procedures for avoiding excess rental payments on durable medical equipment under Medicare. HHS prepared instructions which stated that Medicare would pay for all low-priced medical equipment on a purchase basis and high-priced equipment on a purchase basis if the expected duration of need showed that purchase was less costly than rental. However, the effects of the instructions were uncertain because of two conflicting studies on the implementation of the procedures.

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Matter for Congressional Consideration

Matter Status Comments
The Senate Committee on Finance should consider whether a legislative change is warranted that would limit rental allowances for high-cost durable medical equipment items to a specific percentage in excess of the purchase price. Such a change would provide that Medicare rental payments for high-cost durable medical equipment may be made only on the basis of an assignment where the supplier agrees to accept the Medicare allowances and related limitations.
Closed - Implemented
A provision similar to the GAO suggestion was enacted in December 1987 as part of P.L. 100-203.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Health and Human Services The Secretary of Health and Human Services should direct the Administrator of the Health Care Financing Administration to modify the December 1984 instructions dealing with the reimbursement of low-cost durable medical equipment items on a purchase basis to provide for a 1-month waiting period and that such modified instructions be implemented.
Closed - Not Implemented
In its comments on the report, HHS gave the same reasons for disagreeing with this recommendation as it gave in commenting on the draft report. GAO disagrees with the HHS position. HHS stated that it is studying rental/purchase patterns to see if savings can be obtained.

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