GAO questions payment adjustments to IPPS hospitals

A new report from the Government Accountability Office found Congress has modified how Medicare reimburses certain hospitals under the inpatient prospective payment system (IPPS), with 91 percent of hospitals receiving an adjustment or exemption to the IPPS flat fee per stay.

GAO's April report, released to the public Thursday, identified numerous statutory provisions that increased Medicare payments to a subset of hospitals, which included seven provisions allowing hospitals to be paid under a different geographic wage index and five provisions modifying the classification criteria allowing IPPS hospitals to qualify for supplemental payments through the Medicare disproportionate share hospital (DSH) program.

Moreover, the GAO found three provisions creating criteria for classifying small rural providers as critical access hospitals (CAH), which are exempt from IPPS, according to the executive summary.

In its review, nearly all of the 4,783 hospitals qualified for altered payments or exemption from the IPPS in 2012, threatening the integrity of the payment system. The GAO reviewed provisions enacted into law from 1997 to 2012 to identify those that adjusted payments to a subset of IPPS hospitals or exempted hospitals from the IPPS entirely.

"Many IPPS hospitals qualified for multiple categories of payment adjustments. These findings suggest that the way Medicare currently pays hospitals may no longer ensure that the goals of the IPPS--cost control, efficiency, and access--are being met," the GAO report concludes.

To learn more:
- read the report (.pdf)
- read the executive summary (.pdf)

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