The effective date for the controversial 2002 Medicare outpatient payment update will be delayed until April, says an industry source, even though the Centers for Medicare and Medicaid Services late last week was continuing to publicly rebuff Congress' request that the Jan. 1 start date be pushed back.
The new outpatient rule represents a $1.5 billion payment reduction for hospitals, according to the American Hospital Association. Besides being unhappy with the pay cut, hospital groups have been irate that the CMS plans to hold claims until April because of delays in updating its computer software.
Ten congressional committee leaders with jurisdiction over Medicare urged HHS Secretary Tommy Thompson and CMS Administrator Thomas Scully to delay the outpatient rule until April, saying in a Dec. 12 letter that the CMS had the legal authority and responsibility to do so.
"The delay is going to happen," a hospital lobbyist said after getting word from a high-ranking CMS official on Dec. 14. "Essentially (the CMS is) boxed in," the lobbyist said.
The CMS has been slow to give in to the delay. The CMS press office said repeatedly late last week that the agency planned to move ahead with the Jan. 1 effective date.
In a Dec. 13 statement, however, the House Ways and Means Committee praised the CMS for agreeing to the delay. Scully dismissed the committee's assumption that the CMS had committed to a delay as "wrong," according to a CMS spokesman. But industry and congressional sources said that a deal had been struck between the CMS and the Ways and Means Committee.
The AHA, the Federation of American Hospitals and the American Association of Medical Colleges have threatened to sue Thompson if the effective date is not delayed.
In their letter, the bipartisan congressional leaders, including powerful Ways and Means Chairman William Thomas (R-Calif.) cautioned that a Jan. 1 implementation, with the CMS unable to process claims with the 2002 rates, could create cash-flow problems for small rural and community hospitals and "disrupt their operations-perhaps permanently."
In addition, the lawmakers warned that the rule might be flawed, writing, "Significant coding errors may exist."
On Dec. 10, the CMS sent a memorandum to fiscal intermediaries instructing them to hold hospital outpatient claims for services provided after Jan. 1 until the agency is able to update its computer to use the 2002 rates.
Hospitals would be eligible to receive monthly "special payments" from Medicare in the interim, according to the memo. The payments would equal 90% of the average monthly outpatient payments received by the hospital during a three-month period in late 2001.
The CMS issued the final 2002 payment rule in two parts, which appeared in the Nov. 2 and Nov. 30 Federal Register. The regulation reduces "pass-through" payments for new technology by almost $1 billion and takes out about 8% of the rates for outpatient cases that don't involve medical devices.
