Prospective Payment System

Prospective Payment System – 5 Untold Truths

Overview :

This system allows healthcare practitioners to predetermine the exact reimbursement amount for patients. Here in this blog, we will share the information about the PPS.

Summary :

  • Outpatient PPS is used to reimburse for hospital outpatient services.
  • The traditional fee-for-service payment methods create an extra incentive for patients. It adds unnecessary treatments and services to the bill, which leads to an increase in payment.
  • PRS leads to faster diagnosis, treatment, and a shorter stay in the hospital. This ultimately lowers costs.
  • A PPS offers a reliable solution to control charge-based payments.
  • The PPS no longer covers patients who remain inpatient.

What Is a Prospective Payment System?

A prospective payment system (PPS) includes several payment methodologies. Medicare payments being one of them, are made based on a predetermined, fixed amount.
Insurance reimbursement is calculated based on a predefined cost. It doesn’t consider the intensity of the actual service provided.

What is an (OPPS)?

The Outpatient Prospective Payment System (OPPS) is a Medicare payment system. It determines how much money a hospital would get for outpatient services. These hospitals also include community mental health centers.
The reimbursement rate varies depending on the hospital or clinic’s location. This system is beneficial for reducing beneficiary co-payments. It is a direct response to rapidly growing Medicare expenditures for outpatient services.

Why a Prospective Payment System (PPS)?

The PPS is designed for providers to offer high-quality patient care without overtaxing. Providers know how much payment they will get in advance and can either make or lose money. The PPS system discourages the use of unnecessary services. But, the conventional fee-for-service payment methods adds unnecessary treatments charges to the bill.

The PPS systems also promote efficiency. In old methods, a hospital would keep a patient over the weekend for performing even a simple test on Monday. This approach encourages it to be done over the weekend, even if it requires extra staff. It leads to faster diagnosis, treatment, and a shorter stay in the hospital, which lowers the costs.

Benefits of a Prospective Payment System

The PPS system works without any negative impact on Medicare advantage enrollment growth. It is increasing due to the rules set by the Medicare PPS.
An outpatient PPS aligns payer, provider, and patient incentives. It supports a stable income, making prepayment smoother. This is less likely to be affected by times of uncertainty.
The PPS emphasizes team-based care and may compensate for care coordination. These care models encourage doctors, hospitals, and other health care providers to collaborate. This collaboration, in turn, results in perfect value-based reimbursements.

Paying out-of-network claims for Medicare Advantage plans is a critical potential. It is often also an overlooked opportunity for payers. In this program, payers are not required to pay extra amounts for out-of-network claims. But it is vice versa in conventional Medicare programs. Following the Medicare Advantage rules can be an effective Prospective Payment strategy. It applies to the risk management benefits wherever possible.

The PPS is considered a proven risk-management strategy. Healthcare organizations and hospitals must focus on pre-encounter preparation and enhance coding accuracy.

Controlling Charge-Based Payments using Prospective Payment

Payers keep the entire risk when they pay health care providers based on the percent of charges. This type of contracting strategy is appealing to hospitals. But, it leaves payers vulnerable to the billing practices of hospitals.
This problem can be solved by using prospective payment. Payers can use a case-mix-adjusted charge-monitoring method for assessing price level changes.

Characteristics of Medicare Prospective Payment System

Some of the most common attributes of medicare PPS include:

  • Prepayment amounts cover defined periods.
  • The payment amount is calculated after a complete assessment classification of each patient.
  • It applies only to Part A inpatients.
  • A patient who remains an inpatient will not be eligible for the Part A benefit and will be considered a Part B case. The PPS no longer covers these cases.

Consult our board-certified medical billing experts at Millennium Medical Billing to support your healthcare reimbursement today.

Request A Free Consultation