HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Sunday, January 2, 2005

CMS: Uninsured Discounts Won't Alter Outlier Calculation

The Centers for Medicare and Medicaid Services (CMS) recently added a new hospital FAQ to address a concern raised by many hospitals.  The bottom line is that hospital discounts to uninsured patients, regardless of the patients' financial status, will not have an effect on either outlier payments or new technology payments, because the cost-to-charge ratio is applied, in both situations, to the undiscounted Medicare covered charges from each Medicare claim to calculate the additional payment, if any.  As we all know, one of the key claims in most, if not all, of the class actions filed against nonprofit hospitals around the country in the past six months touch on precisely this point.  According to the complaints, NFPs should charge all uninsured patients the same discounted charges they negotiate with managed care organizations or are obtained by Medicare and Medicaid.  (See, e.g., the "fact sheet" at the plaintiffs' litigation web site.)  This FAQ provides some assurance that such across-the-board discounts won't produce a double hit on the hospitals' bottom line.

All of CMS' FAQs concerning the uninsured (except this new one) are collected here[tm]

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