Federal commission that was replaced by the Medicare Payment Advisory Commission (MedPAC). See Medicare Payment Advisory Commission (MedPAC or MedPac).
Insurance Encyclopedia
Prospective payment system (Health Insurance)
A payment system used in conjunction with Part A Medicare. Reimbursement is provided according to the insured or patient’s condition at the time of admission to the hospital.
prospective payment system (PPS)
Method of payment mandated by the Balanced Budget Act of 1997 (BBA) that changed Medicare hospital payments from cost based to prospective, based on national average capital costs per case. Examples of PPS include Medicare’s physician fee schedule and for inpatient diagnosis-related groups (DRGs) that set a predetermined, fixed dollar amount for a principal diagnosis. PPS helps Medicare control its spending by encouraging providers to furnish care that is efficient, appropriate, and typical of practice expenses for providers. Patients and resource needs are statistically grouped, and the system is adjusted for patient characteristics that affect the cost of providing care. A unit of service is then established, with a fixed, predetermined amount for payment. Sometimes called prospective reimbursement. Also see outpatient prospective payment system (OPPS).
Prospective pricing
To set a price before rendering a service (e.g., the Medicare prospective payment system [PPS]). The opposite of this would be the reimbursement system in which the medical service is given first and then the provider of the service receives payment.
Prospective rating
MEDICAL,USA: 1. To find out a future property or liability insurance rate. 2. Premium for a certain projected period of time based on the loss experience of a specific prior period of time. In such a contract, the carrier assumes the risk (inadequate or excessive) and the purchaser pays a fixed rate for the contract period. Other factors may be considered in adjusting the rates for renewal of insurance such as insurance industry trends or inflation.
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A method used in arriving at the rate and premium for a specified future period, based in whole or in part on the loss experience of a prior specified period.
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A way of calculating the rates or premiums for a particular period in the future. This method is based on the losses sustained during a particular period in the past.
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REINSURANCE,REFERENCE: See: Rating
Prospective rating plan
A plan used to establish premiums for a particular time frame, based on the losses sustained in the previous time frame.
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A plan which uses a formula for determining premiums for a specified period on the basis, in whole or in part, of the loss experience of the previous period.
Prospective reimbursement
See: prospective payment system (PPS).
Prospective reimbursement (Health Insurance)
A system of annual reimbursement. Providers are paid based on a previously established rate.
Prospective Reimbursement for Health
A system where hospitals or other health care providers are paid annually according to rate of payment which have been established ahead of time.
Prospective reserve
A life or health insurance reserve estimated to be sufficient to pay future claims. It is the amount designated as a future liability to meet the difference between the present value of projected future benefits and expenses as well as the present value of future premiums.