November 30, 2001

AAMC May Sue HHS on OPPS Changes

The Medicare outpatient prospective payment system (OPPS) has posed significant problems for many hospitals since it was implemented in August 2000. Concerns about the system escalated this fall when the Centers for Medicare and Medicaid Services (CMS) a) failed to publish the 2002 OPPS payment rates by the scheduled date in November, and b) announced significant "pro rata" reductions in payments for new technologies without providing any supporting data or methodology. CMS now expects to publish OPPS rates by Dec. 1. While the rates will be effective Jan. 1, 2002, it appears unlikely that the Agency will be able to process outpatient claims using the new rates until at least April. This time delay poses enormous operational and payment implications for AAMC member hospitals.

On Nov. 16, the AAMC, along with the American Hospital Association and Federation of American Hospitals, sent a letter to HHS Secretary Tommy Thompson requesting a delay in the pro rata reductions for new technologies and other changes to the payment system until an opportunity is provided for interested parties to comment on the revisions. In the event that CMS fails to comply with this request, the letter notifies the Secretary that the three associations will file a lawsuit. CMS has stated publicly that it has no intentions of delaying the changes to the system. Currently, the AAMC is proceeding on the assumption that the lawsuit will be filed in the very near future. Members will be kept informed as matters progress.

Information: Karen Fisher or Ivy Baer, AAMC Division of Health Care Affairs, 202-828-0490.