Medicare Compliance & Reimbursement

Medigap insurers may be able to work deals with hospitals for cut rates on inpatient deductibles. That's the upshot of the HHS Office of Inspector General's most recent advisory opinion (No. 03-10). In the opinion, the OIG takes the measure of an insurer's proposal to contract with preferred provider organizations for inclusion of its policyholders in the PPOs' hospital networks. The insurer would get a discount of up to 100 percent on Medicare inpatient deductibles it would otherwise have to pay under its Medigap policies. Under the plan, the insurer also would reward policyholders who used network hospitals with a discount on their next premium payment. The OIG points out that waivers of deductibles have long been a big kickback concern. But the problem doesn't end there - the premium discount for policyholders could also run afoul of rules barring inducements to beneficiaries. Nevertheless, the OIG said it wouldn't penalize the insurer, pointing out that not only does its proposal present "a low risk of fraud or abuse," it also could end up lowering costs for policyholders. Lesson Learned: PPOs may have more freedom in the way they do business with Medigap plans than they realize.