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1992.12.22 :  Regional Medicare Contractors

Contact: Anne Verano (202) 690-6145
December 22, 1992

       HHS Secretary Louis W. Sullivan, M.D., announced today the
selection of four special regional Medicare contractors to
provide greater efficiency, and to combat fraud, waste and abuse
in Medicare claims filed by the multi-billion-dollar durable
medical equipment industry.  
       Currently, DME suppliers' claims are processed by 33
Medicare carriers -- from whom the four special contractors were
selected
-- who also handle claims from physicians and outpatient
facilities.  Last May, HCFA invited competitive proposals from
those insurance companies interested in being selected as one of
four regional Medicare DME carriers.
       The regional carriers are The Travelers Insurance Co. in
Hartford, Conn., for the Northeast; Associated Insurance
Companies, Inc. in Indianapolis, Ind. (doing business as Blue
Cross and Blue Shield of Indiana), for the Mid-Atlantic region
which includes some Midwestern states; Blue Cross and Blue Shield
of South Carolina in Columbia, S.C., for the South and Southwest;
and Cigna Corp. in Hartford, Conn., for the West.
       The DME industry, which supplies items used most
frequently by elderly people in their homes, will account for a
projected
$2.3 billion in Medicare expenditures for DME, prosthetics and
orthotics in the current fiscal year. 
       A partial list of items for which claims will be processed
by the new regional carriers includes wheelchairs, walkers, home
oxygen equipment and supplies, other devices and supplies to
treat respiratory conditions, braces and artificial limbs, home
dialysis supplies and equipment, surgical dressings, casts,
immunosuppressive drugs, intravenous feeding equipment and
supplies and other items.
       "These four carriers will have the special knowledge and
experience needed to prevent fraud in claims submitted by
suppliers for DME and other items," Secretary Sullivan said.
       "In the past, unprincipled suppliers have defrauded
elderly Americans and the Medicare program of millions of
dollars," 
Dr. Sullivan said.
       William Toby Jr., who directs the Medicare program as
acting administrator of the Health Care Financing Administration,
said: "With fewer carriers, experienced personnel will process
claims more accurately, and reduce variations in coverage
decisions.  Furthermore, four carriers can more easily cross-
check claims for possible fraud."
       Today's selection is part of a broader initiative
announced by Dr. Sullivan in November 1991, to systematically
curb fraud
and abuse, assure appropriate Medicare payments, and promote
efficiency connected with the purchase and rental of DME by
Medicare beneficiaries.
       Among the abuses the new regional carriers will help
eliminate:
     . In an effort to maximize Medicare payment, some suppliers
engage in "carrier shopping," or the practice of checking to see
which carrier will pay the highest rate for equipment or
supplies, then billing that one.  Upon transition to the DME
carrier, Medicare will no longer pay for DME where the order is
taken, but at the location where the beneficiary lives. 

     . The regional carriers will more closely monitor the
quality and appropriateness of oxygen services provided to
Medicare beneficiaries.  An Inspector General's report found that
Medicare's fee schedule for oxygen is, on average, 174 percent
higher than that of the Department of Veterans Affairs.

       Toby said that "most suppliers of medical equipment
conduct their businesses fairly and honestly.  The use of
regional carriers will deter manipulation of the claims process
by those suppliers who exploit weaknesses in the system."

       The regional carriers will cover the following states:

       The Travelers Insurance Co. (Northeast region) --
Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New
Jersey, New York, Pennsylvania, Rhode Island and Vermont.

       Associated Insurance Companies, Inc., which does business
as Blue Cross and Blue Shield of Indiana (Mid-Atlantic and North
Central region) -- District of Columbia, Illinois, Indiana,
Maryland, Michigan, Minnesota, Ohio, Virginia, West Virginia and
Wisconsin.

       Blue Cross and Blue Shield of South Carolina (South and
Southwest region) -- Alabama, Arkansas, Colorado, Florida,
Georgia, Kentucky, Louisiana, Mississippi, New Mexico, North
Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas
and the Virgin Islands.

       Cigna Corp. (Western region) -- Alaska, Arizona,
California, Guam, Hawaii, Idaho, Iowa, Kansas, Missouri, Montana,
Nebraska, Nevada, North Dakota, Oregon, South Dakota, Utah,
Washington and Wyoming.
                                ###

EDITOR'S NOTE:  HCFA, an agency of the U.S. Department of Health
and Human Services, directs the Medicare and Medicaid programs,
which help pay the medical bills of more than 62 million
Americans.  HCFA's estimated fiscal year 1993 expenditures are
$230 billion, the 12th largest governmental budget of any kind in
the world.