Hospitals Reclassified Under Medicare Prescription Drug, Improvement, and Modernization Act

Apr 20 2004

The Centers for Medicare & Medicaid Services (CMS) today announced that 121 hospitals in 25 states will begin receiving higher payments for patients who are discharged on or after April 1, 2004. The increases are due to the geographic reclassification of these hospitals under a special one-time-only provision in the recent Medicare modernization law. The new payments will be retroactive to April 1.

In the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Congress directed CMS to create a one-time-only appeals procedure for certain hospitals that fell just outside Medicare’s existing criteria for reclassification from their current geographic areas into an adjoining area with higher payment rates, but were deemed to be in need of relief. To fund the increased payments, Congress allocated up to $900 million dollars over three years.

"By ensuring that Medicare pays hospitals fairly, seniors and people with disabilities who live in these communities will continue to get the health care they need," Health and Human Services Secretary Tommy G. Thompson said. "These extra dollars will help them compete for quality health care workers."

The law was signed by President Bush on December 8, 2003, and by the MMA’s February 15 deadline, nearly 550 hospitals had appealed based on one or more of eight criteria established by CMS.

The decisions on the individual cases were made by an independent panel within CMS, the Medicare Geographic Classification Review Board, which has responsibility for handling the geographic classification appeals under the general criteria in the regulations.

"We are pleased to be able to meet the tight timetable established in the MMA to get financial relief to these hospitals as rapidly as possible," said CMS Administrator Mark B. McClellan, M.D., Ph.D. "We are getting $900 million in assistance out quickly to promote continued access to quality care for Medicare beneficiaries and others in the areas served by these hospitals."

Hospitals Reclassified Under MMA