Medicare: Excessive Payments for Medical Supplies Continue Despite Improvements

GAO discussed Medicare payments for medical supplies. GAO noted that: (1) Medicare's payment rates for surgical dressings are generally excessive, compared to wholesale and retail prices; (2) Medicare contractors that process claims for hospitals and nursing homes are unable to identify specific items being billed, which makes it difficult to determine whether the total charges are reasonable; (3) Medicare contractors that process claims for providers have paid for some surgical dressings without first reviewing the claims before payment; (4) claims processing contractors cannot cross-reference payment records to identify possible duplicate payments; and (5) the fee-schedule approach provides a good starting point for setting appropriate Medicare prices, but the Health Care Financing Administration needs greater flexibility to adjust fee schedule prices when market conditions warrant such changes.