Here's some unavoidable bad news for hospitals: The Health Care Financing Administration proposes to reduce previously announced Medicare outpatient prospective payments by 4 percent. In a notice published in the Federal Register last month, HCFA says it is obligated, under the Balanced Budget Act, to reduce hospital payments based on an analysis of Medicare data for 1996.
Not all hospitals will be affected equally. Large teaching hospitals will experience about a 9-percent cut, while rural hospitals will see reductions of about 5 percent. But, according to HCFA, it's hospitals with fewer than 50 beds, mostly in rural areas, that stand to lose the most — a near-10-percent drop. Expect HCFA to propose phasing in the new payment formula for more than 1,000 small hospitals.
And keep in mind that because of the Year 2000 problem, the outpatient prospective-payment system won't be implemented until 2000 anyway.