Res 1993-185 - Laserfiche WebLink

Home Browse Search

Ib? B. Material Uncertainties 1. Leqislation The Debtor is subject to federal, state and local legislation and regulations. The combined effect of such legislation upon the Debtot"'s net income can be material and adverse. a. Licensinq and Accreditation State Licensing of facilities is generally a prerequisite to the operation of Debtor's facility and to participation in federally funded programs, such as Medicare, Medicaid/Medi-Gal and CHAMPUS. Debtor's facility must continue to comply with federal, state and local licensing requirements in addition to municipal building, health and fire codes. Debtor believes that it has obtained necessary licenses and approvals at this time. Debtor is eligible for accreditation by the Joint Commission on Accreditation of Health Care Organizations ("JCAHO") are accredited. JCAHO surveys accredited hospitals periodically (at least once every three yeat"s) to determine whether their accreditation should continue. b. Medicare/Medicaid - Approximately fifteen percent (15.%) of Debtor's revenues in fiscal year 1993 were derived from the Medicare or Medicaid reimbursement programs. Under the Medicare program as originally enacted, hospitals wer.e reimbursed their reasonable costs of furnishing services to Medicare beneficiaries. However, on April 20, 1983, the Social Security Amendments of 1983 (the "1983 Àmendments") were enacted, manda t ing the development of a Prospective Payment System ("PPS") to replace the reasonable cost reimbursement system for most inpat~ent hospital services. Because of an exemption created under the 1983 Amendments, certain hospitals and services, including psychiatric and rehabilitation hospitals and uni ts of general acute-care hospitals are exempt from PPS and are reimbursed on a reasonable cost basis provided they satisfy criteria es tab li shed by the Secretary of Health & Human Services (the "Secretary"). Currently, psychiatric hospitals ,are reimbursed by Medicare based on a target cost per case (which excludes capital cost) and which is established each year. If a hospital's cost exceeds the target cost per case, the reimbursement is generally limited to the targeted cost. Capital cost is reimbursed by Medicare based on the pro rata share of capital cost. Services that are not medically necessary are not covered under Medicare. In 1982, Congress intensified review of Medicare claims regarding medical necessity, quality of care and appropriate level of care by establishing Pier Review Organizations ("PRO's") to review Medicare claims and the quality of care furnished by hospitals. PRO's may deny claims that fail to meet their t"eview criteria, and can find, or t"ecomrnend termination of pat"ticipation and Medicare of, facilities that are found to furnish substandard care. - 25 - a-2015S