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GAO-04-103R 1 (2003-10-06)

handle is hein.gao/gaobaamib0001 and id is 1 raw text is: I G =AO0 Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 October 6, 2003 The Honorable Thomas A. Scully Administrator Centers for Medicare & Medicaid Services Subject: Medicare: Discrepancy in Hospital Outpatient Prospective Payment System Methodology Leads to Inaccurate Beneficiary Copayments and Medicare Payments Dear Mr. Scully: Under the Medicare hospital outpatient prospective payment system (OPPS), beneficiaries can be responsible for paying 50 percent or more of the total payment for outpatient services they receive in hospitals. The Balanced Budget Act of 1997 (BBA)' introduced a mechanism to gradually decrease beneficiary cost sharing to 20 percent of the payment rate for each hospital outpatient service.2 The Centers for Medicare & Medicaid Services (CMS) published a final rule that implemented, effective with the 2002 payment rates, a methodology for calculating copayment amounts that was designed to ensure that even as certain changes affect the payment rates for hospital outpatient services over time, beneficiary coinsurance3 for services would eventually be 20 percent of the total payment rate for each service. Under this 2002 methodology, the copayment amount for each outpatient payment group of services, called an ambulatory payment classification (APC) group, could not increase from year to year, and the beneficiary coinsurance percentage would remain the same or decrease, eventually reaching 20 percent for each APC.5 1 Pub. L. No 105-33, § 4523(a), 111 Stat. 251, 445. 2 Beneficiary cost sharing will decline to 20 percent at a different time for each outpatient service depending on the service's initial cost-sharing percentage. In 2000, the Medicare Payment Advisory Commission estimated that achieving a 20 percent cost-sharing rate for services will take an average of 30 to 40 years. 3 We use the term coinsurance to refer to the percentage of the Medicare payment amount that beneficiaries are responsible for paying for a service under the OPPS. We use the term copayment to refer to the dollar amount that beneficiaries are responsible for paying for a service under the OPPS. ' 66 Fed. Reg. 59,856, 59,888 (2001). 5 Under the OPPS, outpatient services with clinical and resource use similarities are grouped into APCs for payment purposes. Each service within an APC is paid at the same rate. The total payment rate for an APC is composed of two parts: an amount that the beneficiary is responsible for paying and an amount that Medicare is responsible for paying. As the beneficiary coinsurance proportion declines to 20 percent, the proportion that GAO-04-103R Medicare Hospital Outpatient Payments

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