CMS May Not Delay Medicare Outpatient Payments After All

Amid heavy opposition from hospitals, CMS officials are "likely to scrap a plan" to delay the processing of all 2002 Medicare outpatient claims until April, the Wall Street Journal reports. Last week, CMS said it would not process these claims, which could total 20 million, through the first three months of next year because a new software system, the Outpatient Coding Editor, will not be ready until April 1, leaving the agency uncertain of what to pay hospitals for a given outpatient service. In addition, CMS also asked hospitals not to collect copayments from beneficiaries during that three-month period, "potentially creating confusion among millions of seniors" and further delaying hospital revenues. Instead, CMS is looking to "push back the effective date of new 2002 payment rates" to April 1 instead of Jan. 1, meaning hospitals would continue to receive 2001 reimbursements through March. Hospital groups had criticized the plan to delay outpatient reimbursements, saying it would "cause great confusion and financial hardship for many medical institutions." While CMS officials are "hopeful" that they can announce a new plan this week, federal law requires the agency to implement the 2002 rates on Jan. 1. However, "questions" about whether "there are errors in the 2002 formulas used to reach payment rates for thousands of procedures ... could possibly be the legal loophole the federal government needs to legally delay the start of the 2002 rates," the Journal reports (Martinez, Wall Street Journal, 12/17).