Outpatient Payment Policy Under Medicare: Recent Policy Developments from the Rural Perspective
This study was designed to examine outpatient payment options for rural hospitals, the advantages and disadvantages of each, and their potential impact on hospital revenue and rural access to health services. Previous reports and studies conducted by staff at CMS and MedPAC will be reviewed and evaluated. Key informant interviews will be conducted with staff at CMS, MedPAC, and representatives of other organizations knowledgeable about the ramifications of changes to the outpatient payment system for rural hospitals. As part of the review and interviews we will discuss and assess how financial performance measures, such as - margins, cash flow, ratio of inpatient to outpatient revenue - may be influenced by alternative outpatient payment strategies. Of primary significance is examining structures of hold harmless and low-volume adjustments, their relationship to financial performance, and the incentives induced by each of these strategies. Consideration of coding changes and how these may affect rural facilities (who are more financially dependent on outpatient revenue than urban facilities) will be discussed. Options for ensuring the financial viability of rural hospitals will be presented. A Working Paper and Policy Brief will summarize findings.
Publications
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Alternatives to the Outpatient Prospective Payment System: Assessing the Impact on Rural Hospitals
Author(s): Janet Pagan-Sutton, Claudia Schur, Katie Merrell
Date: 04 / 2010
In 2000, CMS implemented a new congressionally mandated hospital outpatient prospective system (OPPS). The new system changed payments for hospital outpatient services from a retrospective cost basis to a prospective amount based on the median resource cost of groups of services expected to be provided. Because of the magnitude of the potential impact of this payment change on both rural hospitals and rural residents, small rural hospitals were granted protection from payment reductions in the transition to OPPS-referred to as "hold harmless" provisions. Given changes in rural hospital reimbursement for outpatient services, particularly as the hold-harmless protection is expected to phase out in December 2009, the purpose of this policy brief is to explore alternatives to the OPPS and how these options would affect rural hospitals.
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