Despite providers' pleas for a second delay, HCFA last week told Congress and the healthcare industry that Medicare's hospital outpatient prospective payment system will become operational Aug. 1.
That's bad news for the five hospital trade groups that have been demanding a second delay, at least until Oct. 1, in the PPS implementation (July 24, p. 6). They argue that implementing the PPS now could cause initial delays in payments to providers and lead to insolvency for some--despite the fact that hospitals would get $800 million in additional revenue in the first year of the new system.
Late last week, HCFA Administrator Nancy-Ann Min DeParle sent a letter to the American Hospital Association, saying that the agency is ready to begin the new PPS on Aug. 1.
The July 27 letter also said HCFA would release its final contingency plan soon, in the event that computerized billing systems at either hospitals or fiscal intermediaries do not work. DeParle highlighted some of the changes to be made to the draft plan, including increasing temporary payments from 70% of the hospital's historical Medicare payment level to 85%.
"We believe this will assist hospitals in maintaining cash flow while maintaining the fiscal integrity of the Medicare Trust Fund," DeParle wrote.
Early last week, HCFA held a town-hall meeting at its Baltimore headquarters to quell providers' fears and field questions about the new PPS.
At the meeting, HCFA seized the opportunity to invoke a cooperative spirit and remind providers of all it has done to make the PPS transition smoother for them. Those efforts include interceding with HHS' inspector general to ensure that billing mistakes won't be prosecuted as fraud and granting an initial 30-day delay in the PPS' original implementation date of July 1.
"Problems, if they occur, will be short-term," said Mark Miller, deputy director of HCFA's Center for Health Plans and Providers.
Days after the meeting, HCFA issued an updated list of drugs and devices that will be temporarily covered by the new PPS.
"I truly don't believe that hospitals will see losses on drugs," said Kitty Ahern, a HCFA health insurance specialist. "There's an awful lot of money built into the system for drugs."
Also last week, Robert Berenson, M.D., director of HCFA's health plans and providers center, told the House Ways and Means health subcommittee that it has no immediate plans to postpone implementation. Another month of delay, Berenson said, would result in another $100 million extra in beneficiary cost-sharing.
Rep. William Thomas (R-Calif.), the subcommittee's chairman, cautioned that to delay it once again would be better than having to stop a PPS already in place if the claims-processing systems don't work.