1. Why are government regulators sensitive to the amount of claims submitted to the government
insurance programs in comparison to retail prices?
The regulators are trying to avoid the alleged abuses of the government insurance
program. The government is sensitive to excess charges for these insurance programs, created by
excess number of reimbursement claims. Another factor will raise the healthcare fraud issue is
the “substantially in excess” reimbursement rate compared to cash and carry prices, which may
provide opportunities for healthcare abuses.
2. Why potentially could/would government programs reimbursement amounts exceed the retail
sales prices for products?
(1) Serving government programs customers requires more internal processes, procedures, and
additional mandated considerations, such as written verification of medical necessity from
customer’s physician, the processing of insurance claims, and the substantiation of product
delivery. These additional requirements will use more recourses than the retail sales.
(2) DMS’s primary source of sales are from customers who are benefiting from government
insurance programs, so there is no need to offer competitive prices. The price is also set by the
program entity.
3.Consider the information provided for the two products shown in Table 3. In accordance with
the OIG’s suggestions for “substantially in excess”, are the government programs reimbursement
rates for each product presently “substantially in excess” of the “usual charges”?
