Definitions for "Prospective Payment System"
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.