Hospital concerns addressed in final outpatient PPS rule
June 1, 2000 3 minutes read
Hospital concerns addressed in final outpatient PPS rule
Increased payments still don’t make up for BBA cuts
Hospital administrators anxiously awaiting the final outpatient prospective payment regulations from the Health Care Financing Administration (HCFA) can breathe a sigh of relief. Many of their concerns have been positively addressed.
"If I were a hospital, I would be pleased with the outcome," says Kevin Quinn, senior health economist with Abt Associates, a health care research and consulting firm in Washington, DC. "There is more money on the table — an overall increase in the budget."
Compared to the proposed rule, the final rule offers more money, reimburses for more outpatient services and devices, and provides a transitional corridor for those programs that suffer losses.
"Surprisingly, many of the administrative changes made in the final rule reflect the impact of the 10,500 comments received from health care organizations, physician groups, beneficiaries, professional organizations, and special interest groups," says Laura Frazier, RHIT, manager of APC solutions for QuadraMed Corp. in San Rafael, CA.
The payment system is based on 451 ambulatory payment classifications (APCs). The regulations, published in the April 7 Federal Register, also are available on HCFA’s Web site (www.hcfa.gov). A 60-day comment period applies only to the regulatory changes in the final rule that resulted from the 1999 budget law. The final rule is effective July 1, 2000.
Hospital outpatient units will bill for services using HCFA common procedural classification system (HCPCS) codes — not APCs — using the same claims forms they use now.
"Although to receive payment under the new system, hospitals will have to more fully code the services they furnish; they will not have to know to which APC the service is assigned in order to determine the payment amount," HCFA says. The agency published the payment rates applicable to each HCPCS codes in the final rule.
The regulation gives hospitals a 4.6% increase over current outpatient payments. Hospitals were expecting a 5.7% reduction in outpatient payments under the Balanced Budget Act (BBA) of 1997.
Still too little
Although the prospective payment system (PPS) payments have increased, American Hospital Association (AHA) officials in Chicago say they remain concerned.
Overall, hospitals are still in a hole compared with where they stood before the BBA. Before the law was passed in 1997, Medicare paid hospitals about 92 cents for every dollar of outpatient services performed, according to the AHA. The BBA cut that amount to about 82 cents on the dollar and threatened to lower it. The 1999 Balanced Budget Refinement Act stopped the decrease.
With the new PPS regulation, the amount of payment will go to about 86 cents to 87 cents for every dollar of outpatient services. That amount will decrease as transitional corridor payments are phased out, AHA officials point out.
During the transition period, through 2003, Medicare will pay hospitals a portion of any losses they would not have incurred under prior law. For rural hospitals with 100 or fewer beds, these losses will be replaced completely.
"The interesting thing is that when you design these transition mechanisms, you usually make them budget-neutral so that hospitals that are hurt get helped, but hospitals that are helped get pulled back a bit," Quinn explains. "The rule has a transition mechanism that only works one way — it only increases people’s payments, not decreasing some of them."
AHA officials are also concerned there isn’t enough time to implement the system accurately. Specifically, they are concerned that providers will have difficulty obtaining software for the new rules and problems training staff.
Facilities still must face "tremendous operational issues that have not been mitigated through legislative efforts or comments submitted," Frazier says.
She points out that even the stated objective of the outpatient PPS was revised to capture HCFA’s intent. "The primary objective of the hospital outpatient prospective payment system is to simplify the payment system and encourage hospital efficiency in providing outpatient services while, at the same time, ensuring that payments are sufficient to compensate hospitals adequately for their legitimate costs."
(HSS, a Hamden, CT-based software company specializing in coding, reimbursement, and profiling of health care services, is offering a detailed analysis of the final outpatient PPS on its Web site: hssweb.com/ Insights/APCs.htm.)
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