Inpatient prospective payment system

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What is the inpatient prospective payment system (IPPS)?

The Inpatient Prospective Payment System is a system of payment or reimbursement for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. The system was set for in Section 1886(d) of the Social Security Act. 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. [1]

Notes

  1. Acute Inpatient PPS, CMS.gov (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html)