Final IPPS rule irks hospital groups

The Inpatient Prospective Payment System (IPPS) final rule, released late Friday, establishes terms that distinguish an inpatient admission from observation status, for which hospitals receive lower rates of Medicare reimbursement. Hospital groups angrily objected to the final IPPS rule specifying how hospitals are to be paid for Medicare beneficiaries' inpatient care starting Oct. 1.

The final rule increases overall hospital payments by $1.2 billion, and slows the rate of anticipated cuts to hospitals that treat larger shares of the poor. However, new requirements for the second phase of the readmission penalty mean a loss of up to 2% or $227 million total, for 2,225 hospitals— although only 18 hospitals will be fined the full 2% of the Medicare DRG rate and 153 will be penalized between 1% and 2%.

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