Overview of Medicare IPPS

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Enhance your understanding of Medicare IPPS


Medicare reimburses acute care hospitals under the inpatient prospective payment system or (IPPS). According to the Centers for Medicare and Medicaid services:

Section 1886(d) of the Social Security Act (the Act) sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. This payment system is referred to as the inpatient prospective payment system (IPPS). Under the IPPS, each case is categorized into a diagnosis-related group (DRG). Each DRG has a payment weight assigned to it, based on the average resources used to treat Medicare patients in that DRG.

The slide presentation below provides an overview of IPPS including exemptions, prospective vs. hospital specific components, and reimbursement methodologies.

For more information from CMS about IPPS, download their fact sheet.

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