Reader Question: Decreased Revenue

Question: How will facilities deal with the decreased revenue under ambulatory payment classifications (APCs)?

Utah Subscriber

Answer: The only way for hospitals to increase their total Medicare revenue for outpatient services is to increase the volume of outpatient services or significantly decrease their costs. This probably will lead to increased competition among hospitals for market share in Medicare outpatient services. The Health Care Financing Administration (HCFA) proposes to encourage hospitals to compete for Medicare outpatient services by voluntarily reducing the co-payments for specific groups of services.

Hospitals may elect to reduce patient co-pays from the current maximum by notifying their Medicare fiscal intermediary three months before the next fiscal year. Hospitals may elect to reduce co-payments for any or all APC groups, though they may not cut the co-payments for some, but not all, services within the same APC group. Hospitals may not elect to reduce the co-payment for an APC group to an amount less than 20 percent of the APC payment rate for that particular hospital.

HCFA will permit hospitals that voluntarily reduce co-payment from Medicare beneficiaries to advertise this co-pay reduction. HCFA expects that competing hospitals will elect to reduce co-payments at an accelerated rate in an effort to increase Medicare revenue.


- Published on 2000-05-01