Department of Health and Human Services, Health Care Financing Administration

Pursuant to a legislative requirement, GAO reviewed the Health Care Financing Administration's (HCFA) new rule on the Medicare program's prospective payment system for hospital outpatient services. GAO noted that: (1) the final rule implements a prospective payment system for hospital outpatient services furnished to Medicare beneficiaries as required by the Social Security Act; (2) the rule establishes requirements for provider departments and provider-based entities; (3) it also implements section 9343(c) of the Omnibus Budget Reconciliation Act of 1996, which prohibits Medicare payment for nonphysician services furnished to a hospital outpatient by a provider or supplier other than a hospital, unless the services were furnished under an arrangement with the hospital; and (4) HCFA complied with applicable requirements in promulgating the rule.