Fiscal Cliff Legislation Helps Recover Medicare Funds
- By BSTQ Staff
As part of the fiscal cliff legislation enacted prior to the end of 2012, $10.5 billion in Medicare overpayments to hospitals will be recovered over the next few years. The money will go toward postponing $30 billion in scheduled payment cuts to physicians who treat Medicare patients.
In 2007, the Centers for Medicare & Medicaid Services (CMS) altered how hospitals submit bills for Medicare patients by creating 749 categories that permit hospitals to more accurately define the illness level of their patients. The system’s intent was to make sure that, for instance, a hospital treating a person who has pneumonia and other illnesses, such as diabetes, would be paid more than a hospital treating an otherwise robust patient with pneumonia. With the extra coding in place, Medicare wanted to decrease its payments to counterbalance the change in billing, but hospitals discouraged the government from cutting rates. However, after inspecting the billing patterns, the Medicare Payment Advisory Commission (MedPAC), a congressional advisory committee, reported in 2010 that the improved coding increased payments by $6.9 billion between 2008 and 2009. In 2009, Congress gave Medicare permission to recover $6 billion in overpayments. But in the spring of 2012, MedPAC estimated that hospitals had received $11 billion in overpayments between 2010 and 2012, which Medicare was not able to recover.
In addition to the $10.5 billion in hospital payment cuts, the Affordable Care Act also includes another $155 billion in reductions to hospitals, which will take place over the next 10 years. The fiscal cliff legislation also extended the health law’s reductions in payments for hospitals that treat large numbers of uninsured and low-income patients until 2022. The extended cuts will save $4.2 billion.
