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Outpatient PPS may also be phased in
The possibility of a deal between the White House and Congress that provides relief from the effects of the Balanced Budget Act (BBA) of 1997 was passed in the final hours of the 1999 session. The deal is worth about $12.8 billion over five years, according to AHA (American Hospital Association) News.
Hospitals would receive much of the aid. They will receive more if the package includes a 5.7% across-the-board reduction in Medicare payments under the outpatient prospective payment system. This reduction has been a sticking point in the negotiations. AHA expects the BBA relief package to be tacked onto one of the appropriations bills for Fiscal Year 2000, but as Hospital Payment & Information Management went to press, it had not yet cleared Congress.
Here is more information about what the package is expected to include:
r Teaching hospitals are expected to get about $600 million in relief over the next two years. The package will provide for a 6.5% increase in indirect medical education payments in the current fiscal year, which began Oct. 1, and 6.25% in fiscal 2001, a slight improvement over the increases currently slated to occur. The Senate provision would have held increases steady at 6.5% over the next few years, while the House plan called for steady reductions.
r Provisions will make graduate medical education (GME) benefits more consistent across the country. Hospitals with GME support below 70% of the national average would see their aid rise to the 70% minimum. Hospitals with GME support at 140% of the national average wouldn’t get inflation adjustments for two years and then would see increases at two percentage points below the inflation rate for the following two years.
r Skilled nursing facilities will receive $1.4 billion in relief through fiscal 2002 through an increase in Medicare payments for certain complex resource utilization groups. The agreement provides for a 25% increase in payments for 12 complex medical groups that were found to be seriously underpriced in earlier repayment schedules and for three rehabilitation groups in the same category.
That increase is to remain in effect until the Health Care Financing Administration (HCFA) in Baltimore recalibrates its payment schedule, supposedly by October 2000. The package also provides for 3.5% annual increases in payments for all skilled nursing facility cases through fiscal 2002.
Phase-in of PPS?
In addition to the BBA relief, Congress and the White House are considering several proposals for phasing in the outpatient prospective payment system (PPS), sources say. HCFA, however, is still planning to implement the system by July 2000.
The outpatient PPS will be based on ambulatory patient classifications (APCs), initially developed by 3M Health Information Systems (3M HIS) in Salt Lake City. The inpatient PPS was phased in over five years, explains Dave Fee, product marketing manager with 3M HIS. He emphasizes that Congress and the White House are not trying to discontinue or delay implementation of APCs. "Phase in does not mean delay."
In addition to discussing how to minimize financial risk, at least initially for outpatient programs, Congress and White House representatives also are discussing payment for drugs. "The perception is that drugs are not handled as well as they need to be in the current preliminary regulations for APCs," Fee says. "There’s a desire that drugs should be handled separately, paid for separately, which they’re not currently."
If the issue is resolved legislatively, it should have been resolved before Christmas, says Michael Blau, JD, at McDermott, Will, & Emery, Attorneys at Law, in Boston.