Prospective Payment System Report - Healthcare System Overview

This report provides an overview of the Prospective Payment System (PPS) in healthcare, focusing on its impact on Medicare and Medicaid reimbursement. It examines the Inpatient Prospective Payment System (IPPS), its methodology, and the role of Diagnosis Related Groups (DRGs) in classifying patient cases and determining payment rates. The report also highlights the factors influencing the DRG assignment, including primary and secondary diagnoses, and the types of procedures performed. Furthermore, it discusses the incentives created by the PPS system for accurate coding and billing practices, ensuring that the hospitals are being paid correctly for the services provided. The report emphasizes the significance of the PPS in the healthcare industry and its continuous adaptation to meet the changing needs of the healthcare system.

Running head: PROSPECTIVE PAYMENT SYSTEM
Prospective Payment System
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1PROSPECTIVE PAYMENT SYSTEM
Question 1
A Prospective Payment System (PPS) is an approach of reimbursement used in the
healthcare settings which is done according to the fixed amount, predetermined. The payment
paid for any specific service depends on that service’s classification system. The principle behind
the Retrospective payment system was that the amount that had to be paid was depended on what
the healthcare professional charged or the amount charged for using any service or services
(Medicare & Medicaid Services (CMS), 2017).
Question 2
The IPPS system charges based on the inpatient case or per inpatient discharge basis. It
ensures that the patients receive proper care based on the right price. There are three factors that
enabled the prospective payment in Medicare inpatient payment –
 Standardized payable amount
 Wage Index
 Weighting factor for each DRG
Question 3
The centers for Medicare and Medicaid services (CMS) allots discharges to DRGs. DGR
assignment is determined by the primary diagnosis of the patient and till 24 secondary diagnosis
that includes any other complications or comorbidities. A total of 25 procedures supplied during
hospital stay impacts DRG including patient’s gender, age and the status of discharge. CMS
evaluates the DRG definition annually for ensuring that every groups continue including
clinically similar cases and similar conditions that require considerable rate of inpatient resources
Centers for (Medicare & Medicaid Services (CMS), 2017).

2PROSPECTIVE PAYMENT SYSTEM
Question 4
A comprehensive permanent amount is paid in the DRG system for a precise event of
care, irrespective of the assets that are actually used in the care of a discrete payment. DRGs
have been recently modified to incorporate additional payment for special types of patients or
hospitals in case severity.
Question 5
The IPPS system is a good idea as it creates incentives for more precise coding
and billing.

3PROSPECTIVE PAYMENT SYSTEM
References
Centers for Medicare & Medicaid Services (CMS), HHS. (2017). Medicare Program; Hospital
Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term
Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2018
Rates; Quality Reporting Requirements for Specific Providers; Medicare and Medicaid
Electronic Health Record (EHR) Incentive Program Requirements for Eligible Hospitals,
Critical Access Hospitals, and Eligible Professionals; Provider-Based Status of Indian
Health Service and Tribal Facilities and Organizations; Costs .... Federal
register, 82(155), 37990.