prospective payment system (pps)

What is the Prospective Payment System (PPS)?

The Prospective Payment System (PPS) is a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service (for example, diagnosis-related groups for inpatient hospital services). This system aims to control healthcare costs by providing a financial incentive for healthcare providers to deliver care more efficiently.

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