Inpatient Prospective Payment System and Outpatient Prospective Payment System - Assignment Example

Harris Kamran Health Sciences Analysis Paper 11 July Prospective Payment Systems for Patients Medicare pays hospitals for expenditure on both the inpatients and the outpatients. There are two systems for this: the Inpatient Prospective Payment System, and the Outpatient Prospective Payment System. Both involve the Medicare paying the hospital (CMS, 2011), and both cover, to some extent, the cost incurred by the patients. Both the systems base their payments on the base pay-rate of the area in which the hospital is working (CMS, 2011).

However, the IPPS also involves a diagnosis-related group (CMS, 2011) condition which analyzes the cost incurred for the different procedures on the inpatients. The OPPS, on the other hand, involves yearly deductibles and copayments (CMS, 2010) by the patient to cover the overall cost. Both the systems, and especially the OPPS, are designed to have an overall profiting effect on the Medicare; they save Medicare the money expended on patients. This is because, for example, in the OPPS, the patient is expected to meet the costs in two ways; the yearly deductible, and the copayment that he has to pay as an outpatient (CMS, 2010).

It is evident that this results in an overall money-saving for the Medicare as opposed to if Medicare had to meet the complete cost without any contribution from the patient. It is not feasible to have only one system for both the inpatient department and the outpatient department. This is because of the different needs of the two departments and the different factors that influence their payment scales. Inpatient usually requires complex procedures (CMS, 2011) and prolonged hospitalization, so the net cots incurred by the hospital are considerably greater than those incurred by the outpatient department because that mostly involves routine checkups, drug administration, and minor surgeries (CMS, 2010).

The number of cases per department may also vary greatly. Hence, it is more practical to have two different payment systems for the two departments. References (2010). CMS: quick facts about payment for outpatient services for people with Medicare Part B. Retrieved from http://www.medicare.gov/publications/pubs/pdf/02118.pdf (2011). CMS: acute inpatient PPS. Retrieved from http://www.cms.gov/AcuteInpatientPPS/