Medicare

How It Works

Medicare is the single largest payer for hospital services in the United States, covering approximately 65 million Americans. Part A covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Part B covers outpatient services, doctor visits, and medical equipment. Part C (Medicare Advantage) is a private insurance alternative to traditional Medicare. Part D covers prescription drugs. Medicare sets payment rates that most hospitals must accept — rates that are typically lower than commercial insurance and serve as a benchmark for hospital cost analysis. HospitalCostData uses CMS Medicare payment data as its primary data source.

Related Terms

• Centers for Medicare & Medicaid Services (CMS) — The federal agency that administers Medicare, Medicaid, and the ACA marketplace — setting hospital payment rates, quality standards, and the data that HospitalCostData uses.
• Inpatient Prospective Payment System (IPPS) — Medicare's payment system for hospital inpatient stays — paying a fixed amount per DRG rather than reimbursing each individual service.
• Diagnosis Related Group (DRG) — A classification system that groups hospital inpatient stays into categories based on diagnosis, procedures, and patient complexity — used by Medicare to determine how much a hospital gets paid.