A HCFA interpretation of a fuzzy area in last year's balanced-budget law could cost hospitals millions in Medicare bad-debt reimbursements.
This week, a coalition of hospital groups will send a letter to HCFA Administrator Nancy-Ann Min DeParle asking her to reverse the ruling.
At issue are Medicare reimbursements for nearly a half-million low-income Medicare beneficiaries who are also eligible for Medicaid. They are known as qualified Medicare beneficiaries. Under the QMB program, Medicaid pays the Medicare premiums, copayments and deductibles for eligible seniors.
Before the balanced-budget law took effect, hospitals were reimbursed at the Medicare rate for the hospital deductible for services relating to QMBs. That rate is currently $762. But under the new law, which took effect Jan. 1, states are allowed to pay hospitals the lesser of the Medicare reimbursement rate or the Medicaid reimbursement rate. In most cases, the Medicaid rate is used.
The Congressional Budget Office projected the change would save the Medicaid program about $5 billion over the five-year period from 1998 to 2002.
The new law also exempted QMBs from any liability arising from the difference between Medicare cost-sharing amounts and the amount paid by the state.
Under the old law, hospitals were able to claim any unpaid beneficiary liability as bad debt. The Medicare program partially reimburses hospitals for bad debt after the hospital makes an effort to collect the debt. But in a letter late last year to state Medicaid directors, HCFA said any shortfall related to QMBs can no longer be claimed by hospitals as Medicare bad debt.
Thomas Scully, president of the Federation of American Health Systems, estimated hospitals could lose between $500 million and $1 billion over the next five years under the change.