What payment system is used for inpatient services in Medicare?

The Inpatient Prospective Payment System (IPPS) is the payment system utilized by Medicare for inpatient services. Under IPPS, hospitals are reimbursed a predetermined amount based on the classification of the patient's diagnosis-related group (DRG) rather than the actual costs incurred during the patient’s stay. This system encourages hospitals to manage their resources more efficiently, as the fixed payment incentivizes them to provide quality care at a lower cost. Additionally, IPPS takes into account various factors such as geographic location and the severity of the patient's condition, which can affect the reimbursement rate.

Other mentioned payment systems serve different purposes. The Outpatient Prospective Payment System (OPPS) applies to outpatient services, while Ambulatory Payment Classification (APC) is specifically designed for outpatient hospital services, separating them from inpatient care. Fee Schedule Reimbursement relates to various services provided by individual physicians or other healthcare professionals rather than to hospital inpatient services. Thus, the focus here on inpatient services aligns perfectly with the utilization of IPPS as the correct payment system for Medicare’s inpatient services.