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Medicare: Excessive Payments Support the Proliferation of Costly Technology

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Report Type Reports and Testimonies
Report Date May 27, 1992
Report No. HRD-92-59
Subject
Summary:

Have Medicare payments for sophisticated radiology services like magnetic resonance imaging (MRI) been adjusted to reflect declining costs for such technology? In some localities, GAO has found that Medicare payments for MRI do not take into account lower costs arising from faster scanning and broader diagnostic uses for the machines. Medicare payments generally do not take into account providers' costs and do not promote efficient use of expensive new technology. Even with legislatively imposed payment reductions in recent years, MRI payments in some areas are still too high relative to the costs incurred by high-volume providers. High Medicare payment rates encourage needless MRI proliferation by reimbursing providers for excess capacity. GAO believes that payment levels should be based primarily on the costs incurred by high-volume, efficient providers and should be updated periodically to reflect the economies achieved as the technologies evolve.

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