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New Law To Revise Medicare Inpatient Hospital Reimbursement Rule

Armen Hareyan's picture

Medicare Inpatient Hospital Reimbursement Rule

President Bush on Saturday signed into law a bill (HR 3668) that will revise a provision in a CMS rule related to Medicare inpatient hospital reimbursements, CQ HealthBeatreports. The "behavioral offset" provision -- which addresses theexpectation that hospitals will "upcode," or bill Medicare for servicesreimbursed at higher rates -- would have reduced Medicare inpatienthospital reimbursements by $20.3 billion over five years, according tohospital groups.

The law, which will reduce the offsets by halfto 0.6% in 2008 and to 0.9% in 2009 but will not address the offset in2010, will restore $2.5 billion in Medicare inpatient hospitalreimbursements over two years and $7 billion over five years.

Thelaw, which both the House and Senate passed last week by voice vote,also will extend by three months two federal programs that helplow-income U.S. residents obtain health insurance and a federalabstinence education program, all of which would have expired on Sept.30.

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In addition, the law will delay by six months a CMS rulethat would have required physicians to write prescriptions for Medicaidbeneficiaries on tamper-resistant pads (Carey, CQ HealthBeat,9/28). According to pharmacy groups, many physicians could not obtaintamper-resistant pads by Oct. 1, the date that the rule would havetaken effect. As a result, the groups said that many pharmacists wouldhave had to deny prescriptions to Medicaid beneficiaries or fillprescriptions improperly with the possibility of having to returnreimbursements (CongressDaily, 9/28).

Other Provisions

The law also will extend a Medicaid asset verification program through2012 and will provide an additional $340 million over five years for aMedicare program that provides bonus payments to physicians who reporton a set of quality measures.

In addition, the law will extend afederal program that pays Medicare Part B premiums for low-incomebeneficiaries and will extend the Transitional Medical Assistanceprogram, which allows families who move from welfare into the workforce to retain Medicaid coverage for up to four months (CQ HealthBeat, 9/28).


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