Issues raised by respiratory therapy arrangements

In large part due to the foregoing issues, Medicare program officials have focused on respiratory therapy as an area with great potential for abuse, and may well introduce significant reforms in the near future. Accordingly, any contractual arrangements for respiratory therapy programs of the type discussed above should be carefully reviewed for compliance with Medicare requirements and for a realistic assessment of the parties' potential exposure to liability under the anti-kickback statute. At a minimum, these agreements should provide for short "without cause" termination provisions, or include a so-called "jeopardy" provision that permits the parties to renegotiate or terminate their contract if significant changes occur in, or if the current arrangement is found or threatened to be found to violate, applicable law.     

Setting limits through global budgeting: hospital cost containment in Rhode Island

In 1974, hospitals in Rhode Island have participated in annual negotiations with state officials and representatives from Blue Cross to determine the allowed increase in statewide hospital costs (the "Maxicap") for the next fiscal year, based on projected increases in hospitals' revenues, changes in patient volume and operating expenses. Individual hospital budgets may be above or below the Maxicap as long as the total increase in hospital costs for all hospitals in the state does not exceed the negotiated amount. At a time when regulatory solutions are increasingly under fire, continued support for Rhode Island's approach to hospital cost containment from third party payers, providers and public officials stands in stark contrast to other states where rate setting was either dismantled or discredited as a cost control strategy. A negotiated global cap on hospital expenditures offers an alternative to formula-based state rate-setting methodologies which could be incorporated as part of an all-payer reimbursement methodology or as an incremental step towards more comprehensive reform.