Saying it believes hospitals are abusing Medicare payment policies, HCFA said it will crack down on transfers of Medicare patients between hospitals and long-term-care units within the same hospitals.
In its proposed regulation outlining Medicare inpatient payments for federal fiscal 2000, HCFA said it plans to rescind cost-based reimbursement for so-called hospital-within-hospital units that transfer more than 5% of their patients back to the hospitals in which they are contained.
HCFA also said it will try to close loopholes in the laws surrounding "satellite" hospitals, which lease space inside other hospitals and operate the leased space as separate facilities.
HCFA said it is trying to reduce Medicare payment abuses stemming from the differences in payment policies between acute-care hospitals, which are paid on a prospective basis, and long-term-care and other specialty hospitals, which are paid on a historical cost basis.
Such arrangements can maximize profits from Medicare by transferring patients between settings or by evading regulations barring hospitals from billing Medicare for some pre-admission diagnostic tests, HCFA said.
The agency's planned move mirrors laws enacted in 1997 that reduced payments when hospitals discharged patients treated under 10 DRGs to post-acute settings. Such discharges are treated as transfers, receiving lower Medicare payments.
The federal government argued that hospitals were trying to maximize Medicare reimbursement by discharging patients early from inpatient beds, thus collecting the full Medicare payment for an abnormally short course of care, and sending the patients into post-acute settings, which are reimbursed on a cost basis.