A method of financing health care that mandates payments in advance for the provision of services and is based on diagnostic related groups.
Medicare's acute care payment method for inpatient care. Prospective payment rates are set at a level intended to cover operating costs for treating a typical inpatient in a given diagnosis-related group. Payments for each hospital are adjusted for differences in area wages, teaching activity, care to the poor, and other factors. Hospitals may also receive additional payments to cover extra costs associated with atypical patients (outliers) in each DRG. Capital costs, originally excluded from PPS, are being phased into the system.
A Medicare system that pays hospitals a set amount for covered diagnostic or treatment services.
Under Medicare, payments to hospitals for inpatient services are prospectively determined amounts based on the DRG assigned at discharge.
The system used by Medicare to pay medical bills. Under this system, Medicare pays hospitals a predetermined rate based on the categories of the Diagnosis Related Groups (DRGs). Federal laws require hospitals to accept the prospective payment rate as payment in full, so you don't have to make up the difference if the cost of your care is higher than the rates.
The federal Medicare program bases its per day payment rates to skilled nursing facilities (SNFs) on this payment system, that was mandated by the Balanced Budget Act of 1997. The rates are adjusted according to the patients' conditions and needs and geographic variation in wages. The purpose of the system is to account for the costs of essential services to patients. (SEE also Resource Utilization Groups)
(see also Full Capitation, Partial Capitation, Per Capita Payment): Any payment system in which the amount to be paid to the provider is set before services are delivered, generally for the coming year. That amount is paid regardless of the number of enrollees served or the amount of services delivered.
A system of Medicare reimbursement for Part A benefits that bases most hospital payments on the patient's diagnosis at the time of hospital admission.
A payment methodology that establishes rates and prices before services are rendered and costs incurred.
The method used by Medicare to pay for inpatient hospital services and skilled nursing facility care, in which payment rates are determined before services are rendered, and not based on actual costs or charges of a specific facility. Rates are intended to cover treatment costs for a typical inpatient with a given diagnosis and are adjusted for the hospital's wages, teaching activity, indigent care, and other factors. PPS payment methods have also been developed for rehabilitation hospitals, home health agencies, and, possibly, long-term care hospitals.
The PPS establishes reimbursement rates for Medicare and, to a much lesser degree, Medicaid services. Payment is based on the classification of an illness or disorder through the use of Diagnosis Related Groups (DRGs). Under the DRG system, prices are negotiated or imposed on the provider in advance; therefore, it is really "prospective pricing" and not "prospective payment."
A system under which hospitals are paid fixed amounts based upon the principal diagnosis for each Medicare patient's hospital stay.
Method of payment under Medicare for skilled nursing facilities.
A payment system in which the amount a hospital receives for treating a patient is fixed in advance by Medicare or an insurer. If the treatment costs more than the payment, the hospital absorbs the loss; if the treatment costs less, hospitals keep the difference.
A payment system in which the payment rate is established in advance of the provision of services and is not altered based on the actual costs incurred by the provider.
Method by which skilled nursing facilities are paid by Medicare.
Federally mandated method intended to control Medicare costs under which Medicare pays a fixed reimbursement to hospitals based on the individual's diagnosis rather than on the actual cost of treatment. Costs are determined in advance-prospectively-rather than after the fact or retrospectively. Implemented by classifying patients into diagnostic related groups (DRGs) that dictate the amount Medicare pays for treatment.
A payment method that establishes rates, prices or budgets before services are rendered and costs are incurred. Providers retain or absorb at least a portion of the difference between established revenues and actual costs.