Question

Define retrospective and prospective reimbursement methods. In what way did retrospective reimbursement contain perverse financial incentives? Cite reference to support your response.

Answer 1

(a)PROSPECTIVE REIMBURSEMENT:-
- It is a method of reimbursement in which Medicare payment is made based on a predetermined fixed amount,rather than on actual charges after the services have been provided.
- The payment amount for a particular service is based on the classification system of given service.
- Example- diagnosis related groups for inpatient hospital services.

b) RETROSPECTIVE REIMBURSEMENT:-
- It is a system in which reimbursement is made to providers after health care services have been given.

-Prosopective payment plans work by assigning a fixed payment rate to specific treatments. - While the rates might change over time because of factors such as inflation, they are not adjusted to accommodate individual patients.
- Under a prospective payment plan, a healthcare provider will always receive the same payment for providing the same specific type of treatment.