HCFA's analysis of the proposed Medicare prospective payment system for hospital outpatient departments predicts that small outpatient departments and sizable teaching programs would lose significant revenues, but one hospital official is calling on HCFA to study the matter further.
Under the HCFA estimates, rural hospitals that perform fewer than 5,000 outpatient procedures annually would lose 17% of their Medicare outpatient department payments. Urban hospitals with the same volume would lose 15.6% of their outpatient revenues.
Teaching hospitals with more than 100 residents, meanwhile, stand to lose 9.4% of their Medicare outpatient revenues, HCFA said.
Few hospitals would come away with more than a slight increase in payments, according to the analysis. Urban hospitals that don't have teaching programs and don't qualify for disproportionate-share payments, however, would see a 41% jump in their outpatient department payments, HCFA said.
HCFA's analysis was published as part of its proposed rule enforcing a PPS for outpatient department services provided to Medicare beneficiaries.
Enacted as part of the Balanced Budget Act of 1997, the outpatient PPS had been scheduled to take effect Jan. 1. But implementation of the PPS has been delayed because of problems related to year-2000 computer problems.
The proposed regulation was published last week in the Federal Register. It will be open to public comment through Nov. 9.
Hospital industry officials questioned HCFA's revenue analysis. Linda Magno, interim vice president for policy at the American Hospital Association, said it was not clear why teaching hospitals, for example, would suffer such a revenue loss. She said she wanted HCFA to provide further explanation of its analysis.
Despite the delay in implementation, Lawrence Goldberg, director of national healthcare affairs with Deloitte & Touche in Washington, warned that hospitals should look at their outpatient costs now and the revenues they would receive under the PPS to make sure their outpatient departments don't begin to suffer significant losses once the system takes effect.
"Hospitals should not take comfort in thinking they have a 15-month delay," Goldberg said. "Any delay gives them the opportunity to see that their numbers are right."