Hospitals brace for payment-plan pain.

Industry leaders contend new system has big bugs

A new Medicare reimbursement system that recently took effect is expected to force more belt-tightening at the area's already financially-strapped hospitals.

On Aug. 1, the federal Health Care Financing Administration rolled, out the new Hospital Outpatient Prospective Payment System (OPPS), a program initiated by the Balanced Budget Act of 1997 (BBA). While the BBA has already led to numerous cuts at many area hospitals, industry officials anticipate that OPPS will cut even deeper into the providers' budgets.

The regulations give HCFA the authority to establish fixed payments for outpatient procedures provided to Medicare patients. These procedures are to be classified into groups called ambulatory payment classifications (APCs).

APCs are similar to the diagnostic related groups introduced back in the '80s for inpatient procedures covered under Medicare, the federally funded health care program for the elderly.

Originally, OPPS was to be implemented on July 1. HCFA subsequently delayed the debut of the new system until Aug. 1.

In June, HCFA sent out a letter to the hospitals announcing the new OPPS implementation date. In the release, HCFA says that the delay is necessary to ensure that HCFA's contractors and the hospitals are up to speed on the expanded claim format that is to be used for the new system -- a software program called Claims Expansion and Line …