Centers for Medicare & Medicaid Services ("CMS") Administrator Tom Scully announced during a CMS Open Door Forum on Hospitals on Tuesday, February 4, 2003, that CMS expects to release new regulations regarding Medicare outlier payments within the next two weeks. The interim final rule would take effect immediately upon publication. Among changes included in the new rule, Administrator Scully anticipated that the outlier threshold amount would be reduced to approximately $22,000, down from the current level of $33,560. The new rule would also eliminate the requirement to revert to the statewide average ratio of cost to charges ("RCC") if a provider's own RCC is more than three standard deviations below the mean. It would also provide for settling Medicare outlier payments based on the RCC in providers' final settled cost reports. Administrator Scully estimated that approximately 400 hospitals would be adversely affected by the new rule, while approximately 400 hospitals would benefit from the changes. (This summary is based on our understanding of Mr. Scully's remarks; the interim final rule has not yet been published.)

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