Medicare Compliance & Reimbursement

Hospitals that have played by the rules when it comes to Medicare outlier payments could actually see an increase in their outlier reimbursement under changes to the system outlined in a March 5 rule from the Centers for Medicare & Medicaid Services.

At least that’s what CMS chief Tom Scully says. “The new policy will achieve a balance between paying hospitals fairly for high cost cases and limiting outlier payments to the 5 to 6 percent of total inpatient spending that Congress mandated,”

Scully said Feb. 28. “We anticipate that the changes … will stop, and likely reverse, the recent trend toward a rapid upward spiral in the threshold for eligibility for outlier payments. As a result, we believe more hospitals will appropriately receive higher payments in the future.”

Outlier payments have been the subject of ever-increasing scrutiny from government watchdogs. CMS believes that some hospitals are gaming the system by artificially inflating their charges relative to costs — a move that allows them to take in a larger portion of outlier payments while at the same time forcing up the eligibility threshold for outlier payments. The rapid upsurge of the threshold — it’s jumped from about $14,000 in 2000 to more than $33,000 in 2003 — leaves honest hospitals eating more of the costs of their complex cases.

Measures in the rule designed to put a stop to inappropriate outlier schemes include:

• allowing Medicare to use more recent data to calculate outlier payments;

• eliminating the statewide average ratio of costs to charges for hospitals with very low computed cost-to-charge ratios; and

• allowing CMS to recover overpayments if the actual costs of a case are less than it had claimed.

To see the rule, go to www.access.gpo.gov/su_docs/fedreg/a030305c.html.