In its recently issued proposed hospital outpatient prospective payment system rule or CY 2013, CMS acknowledges concerns raised by providers related to the inpatient versus outpatient admission decision. CMS solicits comments on potential policy changes that could be made to improve clarity and consensus among providers, Medicare and other stakeholders regarding the relationship between admission decisions and appropriate Medicare payment. Comments are due by September 4, 2012.

Both providers and advocates for beneficiaries have raised concerns about the issue. Beneficiaries are concerned about the increased cost associated with an outpatient stay due to higher copayments and deductibles, as well as the inability to have a later skilled nursing stay covered by Medicare. Patient advocate groups have filed a number of lawsuits related to this issue, and it has begun to gain traction in the popular press. See Gengler, A., "This Could Hurt – a Lot," Money Magazine, August 2012.

Please see full alert below for more information.