News Briefs

CMS makes change to critical access rule

Two new policies that will increase reimbursement to critical access hospitals for Medicare beneficiaries — and allow those hospitals to use up to 25 beds for acute care services — have been implemented by the Centers for Medicare & Medicaid Services (CMS).

The policies implement provisions in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which is intended to bolster health care services in rural areas, according to a recent announcement by CMS.

As a result of those changes, payments to the 863 critical access hospitals are expected to increase by $900 million over the next 10 years. In addition to increasing the permissible number of beds, the new policies put into effect a provision of Medicare law that increases the payment for both inpatient and outpatient services rendered by critical access hospitals from 100% to 101% of reasonable costs. More information is available at

NPI final rule released by CMS

A final rule establishing the National Provider Identifier (NPI) as the standard unique identifier for health care providers filing and processing health care claims and other transaction standards called for under the Health Insurance Portability and Accountability Act (HIPAA) has been released by the Centers for Medicare & Medicaid (CMS).

The NPI is expected to improve efficiency and reduce costs by eliminating the need for providers to maintain, track and use multiple identification numbers as assigned by the various health plans they bill. The NPI replaces those identifiers with a standard unique identifier.

The rule becomes effective May 23, 2005, and most providers required to submit standard electronic transactions under HIPAA must obtain and begin using the NPIs in standard transactions by May 23, 2007. The exception is small health plans, which will have until May 23, 2008, to comply.

Providers need not apply for NPIs at this time, CMS has said, but will receive information on the application process closer to the effective date.

Study: Providers getting better terms

The balance of power between health plans and providers has stabilized during the past two years, with hospitals and other health care providers securing more favorable contract terms, according to a recent study by the Center for Studying Health System Change in Washington, DC.

This is the case despite the fact that contract negotiations have remained tense during the period, notes the study, which examines health plan-provider contracting trends during 2002 and 2003 in 12 nationally representative communities. The report can be found at