In the Medicare payment system for hospital inpatient care, what is the basis for payment?

The correct basis for payment in the Medicare payment system for hospital inpatient care is determined by the patient's diagnosis as classified under the Diagnosis-Related Groups (DRGs). This system categorizes hospital cases into groups expected to have similar hospital resource use and costs. The use of DRGs allows for a streamlined payment process where the hospital receives a predetermined amount based on the diagnosis of the patient rather than the specific treatments provided or the length of the hospital stay.

By using DRGs to assess payment, Medicare aims to incentivize hospitals to manage resources efficiently, encouraging the delivery of high-quality care without unnecessary lengths of stay or excessive procedures. This approach helps standardize payments and creates predictability in budgeting for both hospitals and Medicare, which is crucial for efficient financial planning within the healthcare system.