CMS To Close Loopholes in Medicare Outlier Payments Used by Tenet, Analyst Says

UBS Warburg Financial Analyst Kenneth Weakley last week "warned" investors that CMS will soon close a "major loophole" in the Medicare reimbursement formula that allowed Tenet Healthcare to collect a "disproportionately large share" of outlier payments, which reimburse for unusually expensive care, the Los Angeles Times reports. Weakley, the first analyst to "raise concerns" over the amount of outlier payments Tenet received, indicated in a research report released Nov. 22 that "outlier payments based on statewide averages of medical costs would be eliminated after a 60-day waiting period," according to the Times. Outlier payments currently are calculated by comparing a hospital's charges against a "complicated statewide average" for costs and procedures, the Times reports. Tenet officials recently acknowledged "aggressively raising" their retail charges, which help calculate the special payments. Tenet last year received $763 million in outlier reimbursements. In his report, Weakley did not estimate the amount Tenet would lose in annual revenue if outlier payments were eliminated (White, Los Angeles Times, 11/26).