Are Medicaid outpatient hospital rates headed up?
Are Medicaid outpatient hospital rates headed up?
Hospitals are reading a recent federal appeals court decision in California as a sign that Medicaid outpatient payments soon might be moving upward nationwide.
In a unanimous decision, the Ninth U.S. Circuit Court of Appeals in San Francisco ruled that state Medicaid officials must consider a broader definition of cost in setting payment rates to hospitals.1
In reversing a lower court ruling, the three- judge panel indicated that factors such as quality, efficiency, and access to medical services contribute to overall outpatient cost and should be factored into payments.
California Medicaid officials maintained that rates were meant to encourage hospitals to shift services to lower-cost providers such as freestanding clinics and physician offices.
The original suit was filed in 1990 by Orthopaedic Hospital in Los Angeles and the California Healthcare Association in Sacramento, the state’s hospital industry trade group.
Reference
1. Orthopaedic Hospital v. Belshe, No. 95-55607, U.S. Circuit Court of Appeals, Ninth District (Jan. 9, 1997).
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