On May 22, the U.S. Health Care Financing Administration (HCFA) made public its contingency plan for ensuring proper payments to providers and charges to beneficiaries in the event that it is unable to meet the scheduled implementation date of July 1, 2000, for the new Medicare Outpatient Prospective Payment System (OPPS). Explaining that the OPPS requires major new systems and programming changes that were necessarily delayed due to Year 2000 preparations, HCFA stated that OPPS implementation will proceed after all new systems have been tested and significant problems resolved. Hospitals subject to OPPS have become increasingly concerned about delays in the release of crucial software and other major components needed to implement billing and payment. In addition, hospital billing vendors, upon whom providers are relying to program changes needed to prepare bills under the complicated new system, have indicated that they will have great difficulty being ready by July 1. HCFA's contingency plan provides that if hospitals bill Medicare under the new system as of July 1, but Medicare cannot process claims within three weeks, HCFA will make accelerated payments to hospitals upon request on a biweekly basis at approximately 70% of the amount owed (based on Medicare estimates). Bills for beneficiary coinsurance amounts will be expected to be held until the system is operational. The plan also recognizes that hospitals might be unable to submit bills under OPPS, and provides for accelerated payments for up to eight weeks. Over the course of OPPS, beneficiary copayment amounts are expected to decrease as a percentage of total Medicare payments, even though copayments for certain services in certain areas may be higher than they are today. There has been pressure on HCFA to implement OPPS as scheduled so this gradual copayment reduction can begin. HCFA's contingency plan provides that copayments as of July 1 will be computed under OPPS, regardless of when provider claims are actually processed. HCFA stated that it will make software available on its Internet site to assist in estimating correct copayment amounts for collection at the time of service. HCFA's plan also encourages providers to defer collecting annual Medicare deductible amounts at the time of service until the system is fully implemented.

Request for OPPS Postponement: As HCFA was releasing its contingency plan, several national hospital organizations, including the American Hospital Association and the Association of American Medical Colleges, jointly requested that OPPS implementation be delayed. The organizations' letter enumerated several examples of missed deadlines for release of crucial software, fiscal intermediaries' incorrect instructions to providers and beneficiaries, the inability of major billing vendors to be ready on time, and similar examples to buttress their concern that neither the Medicare program nor providers can reasonably be expected to implement the system on July 1. GNYHA had written to HCFA at an earlier date to express its concerns with system readiness as well.

GNYHA's OPPS Workgroup Meeting: GNYHA is holding a technical workgroup meeting on OPPS on June 6, 2000, from 9:00 a.m. to 12:00 noon, for member hospitals only, to review these and other issues. Interested members should register with Theresa Simon at GNYHA.