Medicare Reimbursement

The Center for Health Affairs Medicare Reimbursement Basics page offers convenient access to the latest information and regulations that hospitals professionals need to know. Today’s healthcare marketplace is characterized by ever-changing regulations and financial pressures, which means it is more important than ever for hospital leaders to understand the latest Medicare reimbursement changes and how they may impact the bottom line.

For The Center for Health Affairs member hospitals, this impact can be substantial. In Northeast Ohio, reimbursement from Medicare accounts for over a quarter of payments to hospitals.

Inpatient Medicare Reimbursement

Hospitals are reimbursed for the care they provide Medicare patients by the Centers for Medicare and Medicaid Services (CMS) using a system of payment known as the inpatient prospective payment system (IPPS). Under this system, hospitals are paid predetermined, fixed amounts by CMS based on a patient’s diagnosis and treatment. A host of additional factors play into the reimbursement formula, such as wage index (a factor that adjusts for regional variations in the cost of labor) and an additional amount for medical education. More information on the many factors that impact the inpatient Medicare reimbursement formula can be found in CMS’ informative Payment System Fact Sheet Series.

Each year CMS makes changes to IPPS payment rates, which apply to the upcoming fiscal year (FY). More information about the most recent changes to the IPPS is available at the Centers for Medicare and Medicaid Services Acute Inpatient PPS Homepage.

Outpatient Medicare Reimbursement

Since 2001 outpatient hospital care provided to Medicare patients has also been based on a prospective payment system, which is aptly termed the “outpatient prospective payment system” (OPPS). As with the IPPS, CMS makes changes each year to OPPS reimbursement rates. These changes apply to the calendar year (CY). Additional information about OPPS payment rates for the current calendar year can be found on the Centers for Medicare and Medicaid Services Hospital Outpatient Regulations and Notices webpage.

Contact us to learn more about Medicare reimbursement.