Hospital overpayments are coming to an end
Hospitals will get about another 18 months to enjoy a glitch in the Medicare rules that have allowed them to keep billions of dollars in overpayments for outpatient services.
For several years, facilities have been receiving what the Health Care Financing Administration (HCFA) calls "formula-driven overpayments." Thanks to an error in the way the beneficiary copayment is computed, hospitals are being overpaid by the Medicare program for ambulatory surgery, radiology, and other diagnostic services. In 1995, the overpayments cost the Medicare program about $1.2 billion.
For several years, Baltimore-based HCFA has tried and failed to get a technical amendment written into law to correct the error. But each time legislation has been derailed, either by lengthy delays or inaction in Congress.
Now a provision in the 1998 Clinton budget will effectively kill the overpayments by introducing the long-awaited outpatient prospective payment system.
If Congress approves the overhaul, the new system, which uses ambulatory patient groups as the basis for determining payments, will become effective Jan. 1, 1999.
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