Hospital groups, at least publicly, were breathing a sigh of relief last week after learning that HCFA delayed by one month the start of the dreaded outpatient prospective payment system.
But the five hospital groups that had pushed for a delay stopped short of declaring victory, saying instead that HCFA still has a lot to do before the new implementation date of Aug. 1.
At least one hospital system had called for a six-month delay of the PPS until Jan. 1, 2001, and it's unclear how much of a difference 30 days will make given how unorganized HCFA has been, according to the hospitals (April 10, p. 10).
"A one-month delay is most certainly helpful," said Carmela Coyle, senior vice president for policy at the American Hospital Association. "It remains to be seen if a system can be put into place smoothly and accurately (by the new deadline)."
Herb Kuhn, vice president of advocacy at the Premier hospital alliance, said his group was pleased with the delay because it gives hospitals and fiscal intermediaries more time to test the new billing software and learn how to use it.
"Some (hospitals) were hoping for more time, and some even talked about 90 days so the start date would coincide with the federal fiscal year (which begins Oct. 1)," Kuhn said. "We're just gratified to get a delay, and we're going to work with the time we have."
In the past, Medicare reimbursed hospital outpatient departments based on their costs. Under the PPS mandated by the Balanced Budget Act of 1997, Medicare will pay hospitals according to set ambulatory payment classifications, or APCs, which are similar to DRGs used on the inpatient side. HCFA will update the payments annually.
Hospital groups did not specify a desired length to the reprieve they requested in their May 24 letter to HCFA Deputy Administrator Mike Hash. They asked only for a delay "until such time as the system is ready and a revised contingency plan is available for unanticipated implementation problems."
In addition to the AHA and Premier, the Association of American Medical Colleges, the Catholic Health Association and the Federation of American Health Systems signed the letter.
HCFA Administrator Nancy-Ann Min DeParle granted the request for delay on June 2, saying in a letter to hospital groups that "it is virtually impossible for HCFA or the hospital industry to implement (the PPS) on July 1" (June 5, p. 4).
In her letter, DeParle sites HCFA's late release of the expanded claim form necessary for the new PPS and other "unavoidable delays on our part" as reasons for pushing the implementation date back to Aug. 1.
While the hospitals were temporarily satisfied with the delay, the American Association of Retired Persons opposed it, saying it means that beneficiaries will now have to wait another month before they see the decreases in their coinsurance payments promised by the PPS.
"We regret the decision to delay the PPS," said John Rother, the AARP's legislative director. "The delay will cost beneficiaries quite a bit of money. While we understand the reason for the delay, we want to keep it as short as possible."
DeParle also asked hospitals to refrain from billing beneficiaries for deductibles or coinsurance when the system comes online Aug. 1 "until we notify (beneficiaries) of the correct amount."
"In this way, we can ensure that most beneficiaries will be charged the correct, generally lower, coinsurance amounts when hospitals' claims are processed in August," DeParle wrote.
Hospitals, however, expressed reservations about doing that because it would cause cash-flow problems--especially for small hospitals.
That may be the only wrinkle for hospitals. At a meeting of Premier's federal affairs network last week, Kathleen Buto, deputy director of HCFA's Office of Health Plans and Providers, said that HCFA had obtained verbal assurances from HHS' inspector general's office that its agents would not pursue billing errors made in the early days of the PPS--good news for worried hospitals.
A call to the inspector general's office for comment was not returned by deadline.