CMS' Underpayment Settlement With 2,200 Hospitals to Cost $3B

HHS and CMS have agreed to settle a dispute with roughly 2,200 hospitals over low reimbursements from the Medicare inpatient prospective payment system, and the total cost of the settlement is expected to cost $3 billion, according to a Los Angeles Times report.

Three major for-profit hospital chains will receive large cuts of the settlement, which are expected to be paid to hospitals by June 30. Yesterday, Nashville, Tenn.-based Hospital Corporation of America said it will receive $271 million from the settlement, and Dallas-based Tenet Healthcare will receive $84 million. King of Prussia, Pa.-based Universal Health Services announced it will receive roughly $35 million.

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Litigation over the hospital underpayments has been pending with HHS and CMS for several years, and the underpayments resulted from erroneous calculations related to the rural floor budget neutrality adjustments that were part of the Balanced Budget Act of 1997.

John Bishop, CFO of Long Beach (Calif.) Memorial Medical Center, said while the agreement temporarily helps hospitals — Long Beach Memorial is expected to receive $6 million — future hospital cuts under the Patient Protection and Affordable Care Act could still reach $155 billion over the next 10 years. "It doesn't change our financial picture, but it helps put a little salve on the wound," he said in the report.

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