CMS Scrutinizes Medicare
Outlier Payments
December 6, 2002 - In a Dec. 3 press release and program
memorandum, the Centers for Medicare and Medicaid Services
(CMS) announced it is directing its fiscal intermediaries
to identify hospitals that have been receiving large amounts
of Medicare outlier payments. Further compliance actions against
hospitals that may be "abusing" the outlier policy,
including possible referrals to the Office of Inspector General,
will be announced in another program memorandum to be issued
by Dec. 15.
Medicare outlier payments are intended to help offset the
losses hospitals incur when the costs for treating a patient
are much higher than the Medicare diagnosis-related group
(DRG) payment for that case. Over the last several years,
the amount of outlier payments has been exceeding the amount
CMS sets aside for this purpose: 5.1 percent of total Medicare
DRG payments plus outlier payments.
CMS Administrator Tom Scully noted that hospitals that treat
actual high cost Medicare patients should be those that receive
outlier payments. CMS, however, believes that certain hospitals
may be "gaming" the system by manipulating the cost
to charge relationship of Medicare cases, which can result
in higher outlier payments. In the press release, Administrator
Scully stated that for hospitals CMS believes have been abusing
the system, all of their operations will be scrutinized for
improper conduct, not just their outlier billing practices.
Information:
Karen Fisher, Senior Associate Vice President
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
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