Saying HCFA is unprepared for the July 1 implementation of the Medicare outpatient prospective payment system, five hospital groups last week asked for a delay.
At deadline, there was widespread speculation within the hospital industry that HCFA was poised to grant the groups' request.
HCFA Deputy Director Kathleen Buto told investors early last week that HCFA was considering a delay, according to published reports.
In a May 24 letter to HCFA Deputy Administrator Mike Hash, the groups said HCFA has missed numerous deadlines for putting in place new information systems needed to process the new claims. They also said the agency hadn't safeguarded hospitals from fraud investigations resulting from any mistakes hospitals make as the new system is implemented.
The letter also charged that HCFA and the Medicare contractors that process outpatient bills have been unable to answer some of hospital executives' questions about details of the new system and have provided inaccurate answers in some cases.
"We don't think they've got things in place and they're ready to go," said Richard Pollack, executive vice president of the American Hospital Association.
The letter was signed by the AHA, the Association of American Medical Colleges, the Catholic Health Association, the Federation of American Health Systems and the Premier hospital alliance.
In its letter to HCFA, the American Association of Retired Persons blasted hospitals for their request and suggested they forgo payments from beneficiares until the new system is functional.
Catholic Health Partners, a Cincinnati-based hospital system, was the first to sound the alert, sending several hundred letters to members of Congress requesting a delay in the implementation of the PPS until Jan. 1, 2001 (April 10, p. 10).
The letter from the major hospital organizations came in the wake of a contingency plan published last week by HCFA. The plan aims to ensure that providers are paid even if Medicare contractors can't process claims or hospitals aren't able to properly bill or calculate beneficiaries' new copayments, which generally will be lower than under the previous Medicare outpatient payment formula.
Hospitals complained that the contingency plan provided for insufficient interim payments, which will cut into the cash flow of many hospitals.
Under the PPS, Medicare hospital outpatient spending in the current fiscal year will increase to $10.8 billion from $10.3 billion. Hospitals will net an average 4.5% payment increase on outpatient services, according to HCFA estimates.
In the cases where Medicare contractors can't process claims on time or hospitals are unable to properly bill Medicare, hospitals will be able to request accelerated payments. Those payments will be 70% of the estimated Medicare fee for the procedure.
Accelerated payments would be available for only eight weeks in instances where the hospital isn't ready to bill Medicare.
HCFA said it would make software available to hospitals that would assist in estimating beneficiary copayments.
With Ann Saphir