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Related Experiment Video

Updated: Aug 9, 2025

The Transition to an Anterior-Based Muscle Sparing Approach Improves Early Postoperative Function but is Associated with a Learning Curve

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The Medicare IPPS 40 Years Later: Lessons Learned and What to Do Next.

Richard F Averill¹, Ronald E Mills

¹The Hesperium Group, Seymour, Connecticut (Mr Averill); and RREntanglements, Florence, Oregon (Dr Mills).

The Journal of Ambulatory Care Management

|February 23, 2023

Summary

The Medicare Inpatient Prospective Payment System (IPPS) successfully controlled costs by promoting behavior change. Expanding IPPS to an episode-of-care bundle can further link cost and quality for improved hospital performance.

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Area of Science:

Health economics
Healthcare management
Public health policy

Background:

The 1983 Medicare Inpatient Prospective Payment System (IPPS) implementation was effective in managing inpatient costs.
IPPS succeeded by acting as a clinically credible management tool, driving behavioral changes and performance improvements.

Purpose of the Study:

To propose the next phase of IPPS, expanding the payment model.
To advocate for an episode-of-care performance bundle linking cost and quality explicitly.

Main Methods:

Analysis of the impact of the 1983 IPPS implementation.
Conceptual framework for an expanded hospital episode-of-care performance bundle.

Main Results:

The original IPPS design facilitated significant cost control through improved hospital management.
The proposed expansion aims to enhance cost control and performance by integrating quality metrics.

Conclusions:

A uniform, transparent episode performance bundle is crucial for future IPPS success.
This expanded bundle will incentivize cost control and provide essential management data for hospitals to improve performance.