As soon as this week, the Centers for Medicare and Medicaid Services will unveil its new policy to rein in the outlier payments hospitals receive to treat the sickest patients. That policy, a response to recent abuses of the outlier system, will not be made effective immediately, as CMS Administrator Tom Scully originally had wanted. Instead, the policy will be subject to a comment period, the length of which was unknown at deadline, before becoming a final regulation. Although details are still unclear, the rule is likely to set new thresholds for outlier payments to prevent the type of overcharging that sparked a federal investigation into Tenet Healthcare Corp., Santa Barbara, Calif. Sources said members of Congress and the White House Office of Management and Budget pressured the CMS not to immediately issue a final rule, giving hospitals time to respond and adjust to new payment policies. In response to fellow lawmakers urging a delay, Rep. Pete Stark (D-Calif.) said in a letter to colleagues last week that a transition period would "tacitly condone potentially fraudulent behavior and would prevent payment increases to well-deserving hospitals."
Docs' pay raise official
Physicians' 1.6% Medicare pay raise became official as President Bush signed into law the 2003 appropriations bill. The law also allocates $300 million to raise the base payment rates for rural and small urban hospitals to the rate for larger facilities. Under previous law, physician payments had been scheduled for a 4.4% cut in March. The 2003 appropriations law gives the Centers for Medicare and Medicaid Services legal authority to revise its physician payment formula, widely considered flawed. The CMS said it will act by next month to make the rate increase effective. It is projected to increase Medicare spending by $54 billion over 10 years.
HCA drops CON challenge
HCA, Nashville, dropped its 4-year-old legal challenge of a new hospital project near Richmond, Va. Bon Secours Richmond Health System will resume construction on its 130-bed St. Francis Medical Center in fall. The $75 million facility is expected to be completed in spring 2005. The state approved the facility in 1999. HCA challenged the decision, saying the state's certificate-of-public-need guidelines had not been applied uniformly and fairly. A Virginia court agreed and returned the case to state regulators for reconsideration. Last month, the state reauthorized the project.
Hospitals settle spendy suits
Five additional hospitals have settled allegations stemming from a 9-year-old whistleblower lawsuit regarding investigational cardiac devices. The settlement amounts are: Methodist Hospital, Houston, $2.75 million; Deaconess Medical Center, Spokane, Wash., $775,000; St. Luke's Episcopal Hospital, Houston, $575,000; Legacy Good Samaritan Hospital and Medical Center, Portland, Ore., $410,000; and Orlando (Fla.) Regional Medical Center, $390,000. That brings to more than $45 million the total collected in the U.S. Justice Department's ongoing investigation into the matter. Twenty-nine other hospitals have settled similar allegations and 40 cases are outstanding. The whistleblower lawsuit, filed by a former medical equipment salesman, alleged that more than 100 hospitals had billed Medicare for procedures involving investigational cardiac devices, a practice that was illegal under Medicare rules at the time.