Centers for Medicare and Medicaid Services Seek Tighter Rein on Emergency Room Costs

In a new proposal, the Center for Medicare and Medicaid Services (CMS) is looking to gain better control of certain staffing and emergency room overhead costs known as facility fees. Currently hospitals operate under a controversial policy that gives them full power to decide how much to charge CMS. However, in an effort to gain control of these fees and redirect billions of dollars spent on outpatient services, CMS is proposing to replace the five escalating codes hospitals now use with one flat rate.

Facility fees are often a point of contention between hospitals and CMS because the fees are billed in addition to physician fees, charges for tests, medicines and other supplies. Hospitals argue that they are necessary to help defray the costs of technology and resources, such as operating rooms.

In an effort to come up with a way of preventing hospitals from selecting higher paying service codes (an illegal practice called upcoding), CMS’s first draft of the proposal was release in July of this year. It received sharp criticism from hospital groups and medical billing service experts right from the onset. According to Duane Abbey, a healthcare billing consultant in Iowa, “This could be a windfall for some hospitals, but others could lose.”

Hospitals deny the practice of upcoding and CMS has fallen short of accusing hospitals of wrongdoing. However, a CMS official stated his agency’s intent is to “eliminate any incentive for hospitals to ‘upcode’ patients whose visits do not fall clearly into one category or another,” as well as “remove any incentives hospitals may have to provide medically unnecessary services or expend additional, unnecessary resources to achieve a higher level of visit payment.”

Part of the issue is the codes themselves. Created by the American Medical Association, hospital have long argued that the codes, created for physicians, were inadequate to capture the costs involved in caring for their patients and do not easily translate for pricing emergency room resources. If the proposal were instituted CMS would re-evaluate the fee every year.

 With healthcare reform being such a hot topic, CMS is definitely coming from all angles to try to improve the system. From the increased use of quality of care metrics to the new ICD-10 codes to flat rate emergency room fees, CMS seems to be pulling out all the stops to get costs under control.

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