Medicare Compliance & Reimbursement

Congressional watchdog agency calls for an end to direct Medicare payments.  Hospitals and laboratories will be negotiating a flurry of new contracts soon if the General Accounting Office gets its way. In a recent report, the GAO calls on the Centers for Medicare & Medicaid Services to stop making direct payments to laboratories for technical pathology services outsourced by hospitals. Instead, hospitals should foot the bill themselves, and work out appropriate terms with laboratories to which they outsource. Such a policy would have saved Medicare $42 million in 2001, the GAO maintains - and saved beneficiaries $2 million in copayments. The watchdog agency argues that ending direct payments wouldn't hurt hospitals or labs too badly because hospitals don't typically outsource that many services. Provider groups, however, are worried about the proposal. Labs brood that hospitals will try to negotiate very low rates, while hospitals are concerned that rural facilities would be hurt by the change. To see the report, go to http://www.gao.gov/new.items/d031056.pdf. Lesson Learned: Hospitals and laboratories should brace themselves for the possibility that direct Medicare payments for outsourced technical pathology services could come to an end. But they can also take heart in the fact that CMS seems responsive to providers' concerns on the matter.