On April 13, 2004, the Ninth Circuit, in United Health Services v. Thompson, rejected an action brought by 79 hospitals and two health care corporations challenging Medicare outlier reimbursement rates. The Medicare statutes require the government to prospectively set outlier thresholds that determine which cases are costly enough to warrant additional reimbursement.

The Centers for Medicare and Medicaid Services (CMS) announced two proposed regulations mandated by the Medicare Modernization Act. One rule describes the structure for the voluntary prescription drug benefit, while the other rule outlines the new Medicare Advantage program with its regional preferred provider organizations.

The final rule adopting the National Provider Identifier ("NPI"), which is the standard unique health identifier for health care providers, was published in the Federal Register on Friday, January 23, 2004.

On May 6, the IRS released Revenue Ruling 2004?51, 2004-22 I.R.B. --, examining an educational joint venture involving a tax-exempt university and for profit company specializing in interactive video training programs. The parties form a joint venture through which teacher training seminars will be conducted. The university controls the educational content delivered by the joint venture while the for-profit company is primarily responsible for presentation of the material and technical support

Section 937 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("MMA") requires the Secretary to establish a process for physicians, providers, and suppliers to correct minor errors and omissions in claims without pursuing the formal appeals process. In a Medlearn Matters Article posted to its website, CMS explains that minor corrections can be made with existing procedures.

The Federal Trade Commission ("FTC") initiated on January 10, 2004, an administrative challenge to a hospital merger that closed in January 2000.

On February 3, 2004, CMS announced a claims processing problem where some hospital inpatient claims were denied and will need to be resubmitted for payment.

On January 13, the GAO issued a report explaining its findings that the Medicare program needs to reform how it pays for assistants-at-surgery.

On June 15, 2004, the Chairman of the House Subcommittee on Oversight announced hearings on tax exemption issues. The first hearing is scheduled for June 22, 2004 and will focus on the pricing practices of tax-exempt and other hospitals.

The long awaited second phase of the final regulations addressing the physician self-referral statute known as the "Stark Law" were published by CMS on Friday, March 26, 2004. See 69 Fed. Reg. 16056. The Stark Law prohibits a physician from referring Medicare and Medicaid patients for certain designated health services to entities with which the physician (or immediate family member) has a financial relationship unless the relationship qualifies for one of the exceptions set forth in the statu