Looking back and moving forward: The Medicare Inpatient Prospective Payment System

Forty years after its implementation, the Medicare Inpatient Prospective Payment System (IPPS) has been a largely successful payment system. What led to this victory and what best practices can we take away on the road to value-based care? Take a step back in time with Rich Averill as he describes the history of IPPS and glimpse into the future of how this history could inform future programs.

“It just seems to me that essentially the attempt to get value has gotten lost in an overly complex attempt to measure value. It should all be about identifying what's really important, setting performance expectations and having accountability for meeting those standards.”
— Richard Averill, MS, principal at the Hesperium Group

Resources

Resources: 

The Medicare IPPS: 40 years later 

Russell, L.B. & Manning, C.L. (1989, February 16). The effects of prospective payment on Medicare expenditures. The New England Journal of Medicine, 320(7), 439-44.

Thompson, J.D., Averill, R.F. & Fetter, R.B. (1979, Summer). Planning, budgeting, and controlling – one look at the future: Casemix cost accounting. Health Services Research, 14(2), 111-125. 

Schweiker R.S. (1982, December). Report to Congress: Hospital prospective payment for Medicare. U.S. Department of Health and Human Services. 

Averill, R.F., Hughes, J.S. & Goldfield, N.I. (2011, April). Paying for Outcomes, Not Performance: Lessons from the Medicare Inpatient Prospective Payment System. The Joint Commission Journal on Quality and Patient Safety, 37(4), 184-192. 

Averill, R, Mills, R, (2023, April-June). The Medicare IPPS 40 Years Later Lessons Learned and What to Do Next. J Ambulatory Care Manage. 46(2), 73–82. 

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