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Medicare Hospital Caps Offer Little Protection A new system that will slowly reduce what Medicare recipients must pay out-of-pocket for their hospital care offers little protection from overcharges. A loophole in the law has allowed hospitals to bill seniors for nearly 50% of the total payment to hospitals for outpatient services compared with 20% for most other Medicare covered services. The new reimbursement system will slowly shrink that charge to the normal 20%, but analysts predict that it will take up to 20 years to fully implement. Under the new system, hospitals will be paid a fixed fee by Medicare to provide a specific service such as one-day surgery, radiology, and rehabilitation therapy. The change will cap what Medicare recipients must pay at $776. The cap, however, will apply separately to each outpatient service. For example, each visit during a course of radiation therapy would be treated separately. A patient could conceivably receive multiple services that are each subject to a separate cap during a single visit to an outpatient center. The new caps will have limited beneficial impact, mainly reducing bills for particularly expensive outpatient services such as one-day surgery. Although the new caps will be little assistance to beneficiaries, pharmaceutical manufacturers and the medical device industry will benefit under the new system. They persuaded Congress last year to set aside $400 million a year to help hospitals buy medicines and medical devices under the new reimbursement system. Covered under the $400 million is an anemia drug used in kidney dialysis manufactured by Amgen, the world’s number one biotechnology company. Amgen promptly announced a price increase of nearly 4% on the drug. Source: “Medicare Hospital Pay System Deadline Concerns Thomas,” Bloomberg, March 10, 2000. “Amgen’s Epogen Price Increase Questioned By Stark,” Bloomberg, March 10,2000. “Drugmakers Boost Lobbying Spending 10% During Medicare Fight,” Bloomberg, January 6, 2000.
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