December 7, 2001

Implementation and Delay Issues Dominate Medicare Outpatient PPS

The Centers for Medicare and Medicaid Services (CMS) is struggling with how to implement the 2002 changes to the Medicare outpatient prospective payment system (OPPS), while the AAMC and other hospital associations continue to push for a delay in the implementation of those changes.

Because of the lateness in publishing the 2002 final rule (see related article), CMS has announced that its systems will not be ready to process claims at the 2002 rates until at least April 1. The Agency has been meeting with various associations and hospitals to discuss two options to deal with the issue of not being able to pay claims using 2002 rates until at least April 1:

• The hospitals or fiscal intermediaries (FIs) would hold outpatient claims until April 1. CMS would make accelerated payments in the interim; however, there is no mechanism for hospitals to receive similar payments for the beneficiary's payment share (which can be up to 50 percent of a hospital's total payment). In addition, it will take at least several months for the FIs to process the backlogged claims.
  
  
• Outpatient claims would be paid based on 2001 rates. When the 2002 rates are incorporated into CMS' payment systems, the claims would be reprocessed and adjustments issued for payment differences. In addition to this administrative burden, hospitals would have to go back to beneficiaries (because the co-payment rates will be different) and either seek additional payments or refund payments.

The AAMC has advocated that both of these options are untenable. In addition, the Association has notified CMS that it believes the Agency violated the Administrative Procedures Act by not providing the data and methodology underlying its determination of the pro rata reduction to the payments for new drugs and devices [see Washington Highlights, Nov. 30].

The AAMC and American Hospital Association have initiated a grassroots letter-writing campaign to HHS Secretary Thompson urging him to delay the 2002 rule.

Information: Karen Fisher, AAMC Division of Health Care Affairs, 202-862-6140, or Lynne L. Davis, AAMC Office of Governmental Affairs, 202-828-0526.