Hospital groups say a mistake in the hospital outpatient prospective payment system will cost hospitals $570 million. However, a 15-month delay in implementation might give them a chance to fix the problem.
But while hospital groups say they shouldn't be hit by the additional costs, others say the changes were meant to affect them.
The new hospital outpatient PPS was enacted as part of last year's balanced-budget law. HCFA released the regulation last week, and it will be published this week in the Federal Register.
The new system was supposed to be implemented Jan. 1, 1999, but because of delays caused by year-2000 computer problems, HCFA recently said it will not make the changes until April 1, 2000.
The new PPS was intended to address such issues as an accounting error that causes beneficiaries to pay about 50% of the cost of outpatient services rather than the usual 20% co-payment.
Hospitals say Congress meant for Medicare, not hospitals, to absorb the cost of the reduced beneficiary payments. However, the balanced-budget law reduced hospital reimbursements by $570 million rather than requiring Medicare to pay the difference.
"We want this done in a way that addresses the legitimate concerns of beneficiaries while not penalizing hospitals," said Thomas Nickels, vice president of government relations for the American Hospital Association. "The cost should fall to the government, which has not been paying its fair share."
But a GOP congressional aide who asked not to be identified said Congress meant for the reduction to hit hospitals.
"The language in the (budget act) is pretty clear," the aide said.
The issue is complicated and open to interpretation.
One interpretation of the balanced-budget law is that the total amount of hospital outpatient payments is equal to the amount of Medicare payments plus the amount of beneficiary copayments. Under that reading, the hospitals would have to make up the difference in the payments.
However, hospitals counter that they were never meant to take the hit, because the Congressional Budget Office didn't include the reductions in its estimates of the effects of the balanced-budget law.
Hospitals aren't the only ones upset about the changes.
Because of the delay in implementing the outpatient PPS until April 1, 2000, seniors will not see the benefit of their reduced copayments until April 1, 2000.
That delay has angered GOP leaders.
"I am outraged that the (Clinton) administration's failure to manage its operations will be carried on the backs of our seniors," said Rep. William Thomas of California, chairman of the House Ways and Means health subcommittee.