Hospitals could face up to several weeks of financial heartburn beginning July 1 as they swallow Medicare's new outpatient prospective payment system.
Glitches in the new PPS billing software may prevent immediate claims processing, causing problems for hospitals and HCFA's fiscal intermediaries.
Despite the bugs and a chorus of complaints from hospitals, HCFA is not likely to postpone the July 1 start of the PPS.
"It would appear the outpatient PPS, from the hospital perspective, will not be delayed," said Lawrence Goldberg, director of national affairs for healthcare at the Washington office of Deloitte and Touche. "Only claims adjudication and cash flow would be delayed. Hospitals are going to have to bill under the PPS whether HCFA is ready or not, and hospitals need to be ready."
Politically speaking, HCFA knows a delay is unacceptable because it would push back the start of a long-term program to reduce beneficiary copayments. Such a move would raise the ire of the politically powerful American Association of Retired Persons and some members of Congress.
However, the sticky politics and the expected increase in payments under the PPS haven't deterred some health systems from publicly seeking a delay (April 10, p. 10).
Hospital groups, reluctant to take on the seniors lobby, have carefully worded their concerns about the PPS to avoid appearing insensitive to beneficiaries. "Nobody's talking delay," said Herb Kuhn, vice president of advocacy for the Premier hospital alliance. "We are working with HCFA very closely to make the transition as smooth as possible for our members."
In the event of any implementation troubles, HCFA has quietly crafted a contingency plan. According to sources familiar with the plan, HCFA would require hospitals to bill beneficiaries as if the PPS were fully operational.
In turn, HCFA would give hospitals interim payments to help them cope with the short-term cash-flow problem. At some point after the glitches were fixed, HCFA would pay hospitals what they should have been paid, the sources said.
Hospital lobbyists told MODERN HEALTHCARE that they had not yet seen HCFA's contingency plan, and a spokesman for HCFA declined to comment. However, agency officials have said they would come up with such a plan by mid-May.
Word of the plan came last week after Premier, the American Hospital Association, the Association of American Medical Colleges and the Federation of American Health Systems sent a joint letter to HCFA asking for Medicare to start paying PPS claims in June. That would help hospitals cope with intermediaries' short-term inability to process claims.