Hospitals warn that "substantial problems" will result if the Centers for Medicare and Medicaid Services enacts its hospital outpatient payment changes on Jan. 1 as scheduled, without its being able to pay claims.
The paperwork problems and tightened cash flow, which hospitals say are likely if the regulation is enacted before the CMS' bill payers are ready, would come in addition to the payment cuts themselves, which the American Hospital Association earlier estimated at $1.5 billion.
The second part of a two-piece hospital outpatient regulation was published in the Federal Register Nov. 30. The first part was published earlier last month.
Compared with current pay levels, hospitals will lose almost $1 billion in 2002 in outpatient "pass-through" payments for procedures using new technology and get about 8% less for outpatient cases that don't involve medical devices. Although the CMS has said hospitals will receive a 2.3% increase in Medicare payments for outpatient services under the rule, this calculation does not include reductions in the pass-through payments.
The AHA, which threatened HHS Secretary Tommy Thompson with a lawsuit earlier last month because CMS didn't share its methodology for developing the regulation, considers the final outpatient rule "unworkable, flawed, confusing," said a spokeswoman. The AHA is pressuring CMS Administrator Thomas Scully to delay the effective date of the rule until the agency goes through a public comment period on the regulation's methodology.
Hospital groups say enacting the regulation before the CMS can pay claims will result in problems for hospitals, as well as beneficiaries, fiscal intermediaries and other payers, such as Medigap and state Medicaid programs.
Scully has acknowledged that the CMS will not be able to process claims until at least April 2002, according to hospital officials who met with him last week. Scully is considering either having Medicare hold all hospital outpatient claims until its system can process them or paying the claims using 2001 rates and then reconciling them once 2002 payment systems are workable.
Both scenarios would pose hardships for hospitals, said officials from the Premier and VHA hospital alliances, the Catholic Health Association, and the National Association of Public Hospitals and Health Systems who met with Scully last week and followed up with a letter to register their concerns. The AHA, along with the Federation of American Hospitals and the American Association of Medical Colleges, both of which joined the AHA in threatening Thompson with a lawsuit, were not invited to the meeting.
A delay in Medicare's payment of the claims would make it difficult or impossible for hospitals to get the beneficiary copayment from other payers, the groups said in their letter. With a projected volume of 18 million hospital claims during the first three months of the year, paying at 2001 rates and reconciling those payments later would pose "a tremendous administrative burden," said the hospital groups that met with Scully.
The four groups encouraged Scully to delay the effective date, at least until April, "to avoid potentially serious disruptions to the Medicare program."
Hospital representatives that included those from the AHA, the federation and the AAMC met with Scully separately on Nov. 30 to discuss possible solutions to implementation problems.