Providers, government press labor/delivery room issue

Although the question of whether to include maternity patients in Medicare reimbursement calculations has been debated for nearly a decade, numerous court decisions on the issue have been handed down in the past year. The decisions--based on appeals of reversals of Provider Reimbursement Review Board (PRRB) rulings--in many cases have found in favor of the provider. At the appellate level, courts have concluded (1) that a hospital's average routine costs would be distorted if patients who had not yet received routine care--such as maternity patients--were included in reimbursement calculations and (2) that including labor/delivery room days in the routine cost calculation violates the statutory prohibition against non-Medicare patients subsidizing the Medicare program. A critical question, however, is the degree to which hospitals will benefit from the favorable decisions. Because of the prospective payment system's scheduled adoption of a "national" reimbursement rate, any adjustment related to labor/delivery room services would need to be factored into hospitals' base-year costs by 1987, and all litigation may not be concluded by then. Other circuit courts have remanded cases to the district court for remand to the PRRB for reconsideration in light of St. Mary of Nazareth Hospital Center, el al. v. Schweiker (718 F. 2d 459 [D.C. Cir. 1983]). In that case, new evidence supported the use of "averaging" theory, which suggests that postpartum patients generate greater routine costs than do Medicare patients and thus should be included in cost calculations to enable equitable reimbursement.