Week 5
Compare and Contrast Payment Systems
Differentiate between the prospective payment systems for outpatient, home health,
physician and non-physician practitioners, and ambulatory surgical settings. In your
response ensure that you compare and contrast payment systems for each of the categories
listed.
Compare and Contrast
Inpatient and outpatient services have a different set of guidelines that are followed to
provide payment to health care organizations. Harrington (2020) explains that outpatient, home
health, physician/non-physician practitioners, and ambulatory surgery centers have separate rules
and regulations related to billing (p. 141). Health care administrators in each setting must be
able to differentiate between the different settings to meet site-specific regulations (Harrington,
2020, p. 141).
Biblical Principles
As health care workers, we should strive to provide quality, unbiased care to our patients.
It is not our decision to judge people from any walk of life as we do not know their history and
the extent of their unique situation. 1 Peter 2:24 states, “Who his own self bare our sins in his
own body in the tree, that we, being dead to sins, should live unto righteousness: by whose
stripes ye were healed” (KJV, 2014). Proverbs 17:22 states, “A merry heart doeth good like a
medicine: but a broken spirit drieth the bones” (KJV, 2014).
Prospective Payment Systems
As of 1997, many Medicare payment systems were converted to Prospective Payment
Systems (PPSs) and was essentially started to curb runaway hospital costs (Schaum, 2013). A
Prospective Payment System (PPS) is a method of reimbursement in which Medicare payments
, are based on a predetermined, fixed amount (CMS, 2021). Under the PPS, payment amounts are
often set at a fixed amount and health care organizations will only receive a certain amount of
reimbursement for services rendered. According to CMS (2021), PPS that services rendered are
based on a classification system of a service like diagnosis-related groups for hospital inpatient
services (CMS, 2021). Outpatient health services are classified differently than inpatient
services. CMS (2021) explains that there are separate PPSs for reimbursement of outpatient
services like home health services, hospice services, psychiatric facilities, inpatient rehabilitation
facilities, long-term care facilities, and skilled nursing facilities. Under PPSs, if the hospital can
discharge a patient prior to the hospital expended the Medicare payment then the hospital can
keep the extra funds (Schaum, 2013). Furthermore, if the hospital spent more than the Medicare
Payment, the hospital is required to absorb those costs (Schaum, 2013). Due to reimbursement
coverage, hospitals had to learn quickly to discharge patients out of their care to other health care
agencies like home health agencies and skilled nursing facilities. Since hospitals are more apt to
discharge quickly, Medicare then began to receive higher payments to other sites of care like
physicians, hospital outpatient departments (HOPDs), ambulatory surgery centers (ASCs), and
durable medical equipment (DME) companies (McMillan, Long, & Payne, 2019).
Hospital Outpatient Prospective Payment System
Hospital Outpatient Prospective Payment System (OPPS) is best defined as the system
through which Medicare decides how much money a hospital or community mental health center
will get for outpatient care to patients with Medicare (Medicare Interactive, 2021). The Centers
for Medicare and Medicaid (CMS) started the OPPS in 2000 to pay for certain outpatient
services as a result of the Balanced Budget Act (BBA) of 1997 (CMS, 2019). OPPS applies to
hospital outpatient departments, however certain outpatient departments are excluded as they
only provide Medicare Part B services. Other health care entities that are excluded are critical
access hospitals (CAHs); Indian Health Services hospitals; and hospitals located in American
Compare and Contrast Payment Systems
Differentiate between the prospective payment systems for outpatient, home health,
physician and non-physician practitioners, and ambulatory surgical settings. In your
response ensure that you compare and contrast payment systems for each of the categories
listed.
Compare and Contrast
Inpatient and outpatient services have a different set of guidelines that are followed to
provide payment to health care organizations. Harrington (2020) explains that outpatient, home
health, physician/non-physician practitioners, and ambulatory surgery centers have separate rules
and regulations related to billing (p. 141). Health care administrators in each setting must be
able to differentiate between the different settings to meet site-specific regulations (Harrington,
2020, p. 141).
Biblical Principles
As health care workers, we should strive to provide quality, unbiased care to our patients.
It is not our decision to judge people from any walk of life as we do not know their history and
the extent of their unique situation. 1 Peter 2:24 states, “Who his own self bare our sins in his
own body in the tree, that we, being dead to sins, should live unto righteousness: by whose
stripes ye were healed” (KJV, 2014). Proverbs 17:22 states, “A merry heart doeth good like a
medicine: but a broken spirit drieth the bones” (KJV, 2014).
Prospective Payment Systems
As of 1997, many Medicare payment systems were converted to Prospective Payment
Systems (PPSs) and was essentially started to curb runaway hospital costs (Schaum, 2013). A
Prospective Payment System (PPS) is a method of reimbursement in which Medicare payments
, are based on a predetermined, fixed amount (CMS, 2021). Under the PPS, payment amounts are
often set at a fixed amount and health care organizations will only receive a certain amount of
reimbursement for services rendered. According to CMS (2021), PPS that services rendered are
based on a classification system of a service like diagnosis-related groups for hospital inpatient
services (CMS, 2021). Outpatient health services are classified differently than inpatient
services. CMS (2021) explains that there are separate PPSs for reimbursement of outpatient
services like home health services, hospice services, psychiatric facilities, inpatient rehabilitation
facilities, long-term care facilities, and skilled nursing facilities. Under PPSs, if the hospital can
discharge a patient prior to the hospital expended the Medicare payment then the hospital can
keep the extra funds (Schaum, 2013). Furthermore, if the hospital spent more than the Medicare
Payment, the hospital is required to absorb those costs (Schaum, 2013). Due to reimbursement
coverage, hospitals had to learn quickly to discharge patients out of their care to other health care
agencies like home health agencies and skilled nursing facilities. Since hospitals are more apt to
discharge quickly, Medicare then began to receive higher payments to other sites of care like
physicians, hospital outpatient departments (HOPDs), ambulatory surgery centers (ASCs), and
durable medical equipment (DME) companies (McMillan, Long, & Payne, 2019).
Hospital Outpatient Prospective Payment System
Hospital Outpatient Prospective Payment System (OPPS) is best defined as the system
through which Medicare decides how much money a hospital or community mental health center
will get for outpatient care to patients with Medicare (Medicare Interactive, 2021). The Centers
for Medicare and Medicaid (CMS) started the OPPS in 2000 to pay for certain outpatient
services as a result of the Balanced Budget Act (BBA) of 1997 (CMS, 2019). OPPS applies to
hospital outpatient departments, however certain outpatient departments are excluded as they
only provide Medicare Part B services. Other health care entities that are excluded are critical
access hospitals (CAHs); Indian Health Services hospitals; and hospitals located in American
