New Medicare hospitals receive 3 times more capital expenditure than older hospitals, observer says

Medicare pays new hospitals three times the capital cost of existing hospitals, costing taxpayers an additional $ 1.3 million per hospital each year, according to data report The HHS Inspector General’s Office released this information on Monday.

Under the Inpatient Inpatient Payment System (IPPS) rule, CMS pays Medicare-related capital costs to new hospitals for their first two years of enrollment based on their costs. All other hospitals must cover their capital expenditures in cash from their inpatient payments, regardless of their cost.

Medicare pays special attention to new facilities because they may lack enough Medicare patients – and associated reimbursements – and have start-up costs to cover.

“Unlike existing hospitals, new hospitals do not have the ability to reserve payments from previous years to fund capital projects,” CMS administrator Chiquita Brooks-LaSour wrote in a letter to OIG.

But an exemption may be necessary because the average capital cost associated with Medicare is only 3% higher for new hospitals than for existing hospitals. Likewise, the average Medicare use rate in new hospitals was only 15% lower, according to OIG.

“We have identified significant potential cost savings for Medicare if the IPPS exemption is lifted and capital payments to new hospitals are made through IPPS. For the 112 new hospitals we reviewed, Medicare paid a total of $ 283 million more in capital expenditure than it could have. paid if these hospitals were paid through IPPS, ”the statement said.

According to OIG, about 60% of new hospitals were part of a network that could cover their capital costs if needed.

The federal supervisor has recommended that the CMS evaluate whether the policy should be changed. The agency agreed.

The Congressional Budget Office estimates that the Medicare health insurance trust fund will become insolvent by 2026, and its deficit will rise to more than $ 500 million by 2031. But there is no automatic flaw remediation process. Legislators can cut provider payments to curb Medicare spending, and those with the lowest ROI are likely to find themselves on the block.

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