Discussion 4 1 - n your post, compare and contrast prospective payment systems with non-prospective PDF

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n your post, compare and contrast prospective payment systems with non-prospective payment systems. Explain the classification systems used with prospective payments. How do the prospective payment systems impact operations?...

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Prospective Payment (PP) is a reimbursement method based on predetermined fixed amounts. It all is based on a classification system; such has DRGs. An important advantage of PP is the fact that code-based reimbursement creates provider incentives for correct coding and billing, ultimately to control cost. Prospective payment systems are used for many services such has acute care, transplant services, inpatient rehabilitation facilities, home health, hospice, long term care hospitals, skilled nursing facilitates, etc. (CMS, 2020). A downfall to this being that providers are limited on the fixed amount and only allow for those fixed systems of care to code/bill for. Non-Prospective Payments, also called Retrospective payments, is a reimbursement method that pays providers on actual charges (Prospective Payment Plan vs. Retrospective Payment Plan, 2016). This use to be the most common practice for how providers, hospitals or an organization billed for their services they completed on the patient. Its basically an itemized bill that can have multiple lines of billable diagnoses and treatment plans, that is then sent to the insurance coverage plan for them to review and render payment being the full amount listed on the bill. It is important to note that the insurance company can deny or approve these itemized bills for payment. The classification system for the Prospective payment systems is called the diagnosis-related groups (DRGs). “The DRGs classify all human diseases according to the affected organ system, surgical procedures performed on patients, morbidity, and sex of the patient.22 The classification also accounts for up to eight diagnoses in addition to the primary diagnosis, and up to six procedures performed during the stay” (Office of Inspector General, 2001). Prospective payment systems came into effect when the Medicare cost increased dramatically. “Congress had four chief objectives in creating the PPS, according to Centers for Medicare & Medicaid Services (CMS), which were to ensure fair compensation for services rendered and not compromise access, update payment rates that would account for new medical technology and inflation, monitor the quality of hospital services, and provide a mechanism to handle complaints” (Harrington, M 2019). Since hospitals received a fixed amount for the services, they provided, some feared it would allow providers to not give the best quality of care for the patients being seen. However, it did the opposite providers and hospitals were more aware of cost of care, quality of care they were giving and the collaboration with other providers and facilities a patient may be transferred to for care, they also were getting incentivized for using the DRG’s and the care patients received. This was just one shift in the way quality or care and cost have changed along the healthcare journey that is ever changing.

References: CMS. (2020, November 13). Prospective Payment Systems - General Information | CMS. CMSCenter for Medicare & Medicaid Services. https://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/ProspMedicareFeeSvcPmtGen/index?redirect=/prospmedicarefeesvcpmtgen/ Harrington, M. K. (2019). Health Care Finance and the Mechanics of Insurance and Reimbursement. [MBS Direct]. Retrieved

from https://mbsdirect.vitalsource.com/#/books/9781284203301/ Office of Inspector General. (2001, April). Medicare Hospital Prospective Payment System How DRG Rates Are Calculated and Updated. Office of Inspector General Office of Evaluation and Inspections Region IX. https://oig.hhs.gov/oei/reports/oei-09-00-00200.pdf Prospective Payment Plan vs. Retrospective Payment Plan. (2016, February 22). Nasdaq. https://www.nasdaq.com/articles/prospective-payment-plan-vs-retrospective-payment-plan-201602-22 Watne. (2017, May 24). Unraveling Payment: Retrospective vs. Prospective Payment. University of Utah Health. https://accelerate.uofuhealth.utah.edu/connect/unraveling-payment-retrospectivevs-prospective-payment...