A prospective payment system (PPS) is a term used to refer to several payment methodologies for which means of determining insurance reimbursement is based on a predetermined payment regardless of the intensity of the actual service provided. It includes a system for paying hospitals based on predetermined prices, from Medicare. Payments are typically based on codes provided on the insurance claim such as these: *

Diagnosis-related group Diagnosis-related group (DRG) is a system to classify hospital cases into one of originally 467 groups, with the last group (coded as 470 through v24, 999 thereafter) being "Ungroupable". This system of classification was developed as a collaborat ...

s for hospital inpatient claims *

Ambulatory Payment Classification APCs or Ambulatory Payment Classifications are the United States government's method of paying for facility outpatient services for the Medicare (United States) program. A part of the Federal Balanced Budget Act of 1997 made the Centers for Medica ...

for hospital outpatient claims *

Current Procedural Terminology The Current Procedural Terminology (CPT) code set is a procedural code set developed by the American Medical Association (AMA). It is maintained by the CPT Editorial Panel. The CPT code set describes medical, surgical, and diagnostic services and ...

for other outpatient claims The PPS was established by the

Centers for Medicare and Medicaid Services The Centers for Medicare & Medicaid Services (CMS), is a federal agency within the United States Department of Health and Human Services (HHS) that administers the Medicare program and works in partnership with state governments to administer M ...

(CMS), as a result of the Social Security Amendments Act of 1983, specifically to address expensive hospital care. Regardless of services provided, payment was of an established fee. The idea was to encourage hospitals to lower their prices for expensive hospital care. In 2000, CMS changed the reimbursement system for outpatient care at Federally Qualified Health Centers (FQHCs) to include a prospective payment system for

Medicaid Medicaid in the United States is a federal and state program that helps with healthcare costs for some people with limited income and resources. Medicaid also offers benefits not normally covered by Medicare, including nursing home care and pers ...

and Medicare. Under this system, health centers receive a fixed, per-visit payment for any visit by a patient with Medicaid, regardless of the length or intensity of the visit. The per-visit rate for the Medicaid PPS is specific to the individual health center location. The rate is determined and updated by a financial accounting process conducted by State Medicaid agencies. The FQHC PPS rate for Medicare (previously called the All Inclusive Reimbursement Rate), in contrast, is fixed at the same level across different health centers. Aside from FQHCs, other entities that provide outpatient services to Medicaid patients, that are also paid by a PPS methodology include: *FQHC look-alikes ( health centers not receiving a federal grant under section 330 of the

Public Health Service Act The Public Health Service Act is a United States federal law enacted in 1944. The full act is codified in Title 42 of the United States Code (The Public Health and Welfare), Chapter 6A (Public Health Service). Contents The act clearly establis ...

, but that otherwise meet the criteria for FQHC status.) *

Indian Health Service The Indian Health Service (IHS) is an operating division (OPDIV) within the U.S. Department of Health and Human Services (HHS). IHS is responsible for providing direct medical and public health services to members of federally-recognized Nativ ...

Health Centers * Rural Health Centers (in some states, like California)

References

{{Reflist Medicare and Medicaid (United States) Healthcare in the United States

See also

References