The General Accounting Office warned yesterday that the government will pay hospitals more than $900 million in excess Medicare reimbursement fees next fiscal year unless some rate changes are made.
The GAO, the investigative arm of Congress, told a House Ways and Means health subcommittee reviewing the new Medicare reimbursement plan that the Health and Human Services Department has been using unaudited and incorrect data in calculating its reimbursement rates.
"If no adjustments are made to the current rates to correct these problems, Medicare could overpay inpatient hospital services by about 4.3 percent, or about $940 million in fiscal year 1986," GAO representative Michael Zimmerman said.
"Based on these preliminary estimates, Medicare overpayments could total over $8 billion during the next five years," he added.
The prospective-payment system, now in its second year of a three-year phase-in, reimburses hospitals in advance for Medicare patients based on set rates for specific services. Efficient hospitals that can keep costs down and discharge patients sooner can keep any money they save.
Carolyne Davis, of HHS' Health Care Financing Administration, told the panel that prospective payments are "the single most important improvement in the Medicare program since it began in 1966."
But Clarice Jones, chairman of the American Association of Retired Persons, contended that the program encourages hospitals to "skimp on quality care" by encouraging them to discharge Medicare patients as soon as possible "in order to maximize their profit." Davis said the department would recommend a freeze in fiscal 1986 hospital reimbursement rates at current levels when proposed rates are issued next month.
Spokesmen for several hospital groups said they backed the prospective-payment concept as long as there are fair rate increases.