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CMS rules regarding what constitutes a patient day are inconsistent and often confusing. Hospitals and their advisers should have a clear understanding of CMS's rules regarding what constitutes a patient day, the impact of those rules on Medicare payment, and instances in which CMS's rules may be subject to challenge. Lack of familiarity with the finer points of these rules may result in substantial underpayments for services rendered.

Discount policies are likely to face increased scrutiny in light of congressional inquiries on Medicare outlier payments and recent media attention regarding pricing for the uninsured. If you're considering making changes to your hospital's policy, you'll need to understand the current regulatory environment, recognize potential concerns, and develop a plan of action that complies with recent HHS guidance.

CMS and the OIG are examining payment for residents' training in nonhospital settings. Over the next year, as the current moratorium on Medicare disallowances of GME and IME payments for these residents comes to a close, providers should stay up to date on the latest developments and anticipate changes that are likely to follow.

Two recent publications of the Centers for Medicare and Medicaid Services (CMS) seem to belie the view that providers can expect to see an easing of their regulatory burden under the Bush Administration. Program memorandum (PM) A-01-141, issued in December 2001, sets forth the agency's expectations with respect to audits of Medicare cost reports. PM A-01-141 instructs Medicare intermediaries "as a general rule" not to reopen a cost report or settle an appeal if the request for reopening or appeal is based on submission documentation that was not made available at the time of the audit. A proposed rule issued by CMS on January 25, 2002, would require a Medicare provider to identify and return an overpayment to its Medicare intermediary within 60 days after the provider identifies the overpayment. The proposed rule defines "overpayment" but leaves many issues open to interpretation.