Letters/Comments
Inpatient Prospective Payment System (PPS)
What Is the Inpatient Prospective Payment System (PPS)?
One in every five Medicare beneficiaries is hospitalized one or more times each year. Of the approximately $300 billion spent on the Medicare program each year, almost $100 billion is spent on inpatient services.
More than three-quarters of the nation's inpatient acute care hospitals are paid under the inpatient prospective payment system, while nearly a quarter are paid based on costs and are called Critical Access Hospitals. The inpatient PPS pays a flat rate based on the average charges across all hospitals for a specific diagnosis, regardless of whether that particular patient costs more or less. Everything from an aspirin to an artificial hip is included in the package price to the hospital.
Under the inpatient PPS, each case is categorized into a diagnosis-related group to determine the base rate. Payment also is adjusted for differences in area wage costs, teaching status, high percentage of low-income patients, the use of new technology and extremely costly cases.
Read on to explore resources and other educational tools to learn more about the inpatient PPS.
Explore Inpatient Prospective Payment System (PPS) Topics
Inpatient PPS Final Rule for FY 2027
The Centers for Medicare & Medicaid Services (CMS) July 31 issued its hospital inpatient prospective payment system (PPS) and long-term care hospital (LTCH) PPS final rule for fiscal year (FY) 2027.
AHA Comments on CMS' FY 2027 Inpatient Proposed Payment Rule
The AHA appreciates the opportunity to comment on the CMS hospital inpatient prospective payment system
proposed rule for fiscal year (FY) 2027.
AHA Statement on FY 2027 Final IPPS & LTCH Payment Rule
AHA appreciates efforts to partner with CMS to expand the effectiveness of value-based models. We believe that flexibility is critical, as some hospitals lack the scale or financial capacity to make the investments in care redesign that are necessary for success.
Expansion of Comprehensive Care for Joint Replacement Model
The Centers for Medicare & Medicaid Services (CMS) July 31 finalized its proposal to expand the Comprehensive Care for Joint Replacement (CJR) Model.
AHA Comments on CMS' FY 2027 Proposed Joint Replacement Expanded Model
The American Hospital Association appreciates the opportunity to comment on the CMS’ proposed Comprehensive Care for Joint Replacement Expanded (CJR-X) Model.
FY 2027 Inpatient Prospective Payment System (IPPS) and Comprehensive Care for Joint Replacement (CJR-X) Proposed Rule Webinar
This member-only webinar highlights key provisions in the fiscal year 2027 Inpatient Prospective Payment System proposed rule, including the proposed Comprehensive Care for Joint Replacement Expanded (CJR-X) model.
AHA Statement on FY 2027 Proposed IPPS & LTCH Payment Rule
While the American Hospital Association appreciates CMS’s efforts to expand the reach of value-based models, we believe that mandatory participation presents significant challenges, particularly for hospitals that lack the scale or financial capacity to make the necessary investments in care redesign.