Medicare paid new hospitals three times more for their capital costs than they would have been paid under the inpatient prospective payment system (IPPS), according to an audit report from the Office of Inspector General, Healthcare Finance reports.
The report revealed the new hospital capital cost exemption of the IPPS caused Medicare to incur up to $423.2 million in costs between 2012 and 2018. The audit concluded Medicare could have saved $283 million on capital costs in that period had hospitals been paid through IPPS.
Medicare regulations require that established hospitals be paid for capital costs through the IPPS, regulations which also allow new hospitals to be exempt from the IPPS payment methodology for capital costs and, instead, to be paid for these costs on a cost reimbursement basis for their first two years of operation. Read more.
CMS Should Remove Hospital Capital Cost Exemption from IPPS, OIG Says: Report
