The press has been reporting that the just-passed federal appropriations bill contains language that will "fix" the physician fee schedule problem under Medicare. Indeed, it has indicated that physicians in 2003 will, at a minimum, have their fees frozen at the 2002 level or perhaps even receive an increase of 1.6%. It is true that the H.J. Res. 2 (Omnibus Appropriations bill for FFY '03) amends the physician fee schedule statute. It is NOT true, however, that the bill requires the Secretary (or even gives him new authority) to do anything. The new provision only amends the already-broad language in existing law which immunizes the Secretary from lawsuits that might have otherwise been filed as a result of the many decisions the Secretary must make concerning the physician fee schedule each year. In my opinion, the new language really adds nothing to the existing immunity. Nevertheless, the Secretary remains free to take action or not take action to correct the prior errors in the update factor, as he sees fit. We must now wait to hear from CMS what it plans to do, if anything. All hospitals in rural areas and "other" urban areas (i.e., MSA's of less than one million population) received a Valentine Day's gift from the Congress. H.J. Res. 2 also mandates a temporary payment increase for these providers. Specifically, for the six-month period beginning April 1, these hospitals will be paid using the standardized amount for "large" urban areas. (This will, on average, be worth roughly $67 per discharge. Each affected provider's actual experience will vary, depending on its wage index which is NOT affected.) Hospitals need to understand that this payment increase sunsets on September 30. There is NO effect on the rates for FY '04 This legislation also does NOT affect any other payment adjustment which is dependent on a hospital's location (e.g., DSH or SCH status).

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