HEA
201
Quiz
#3
● Define retrospective and prospective reimbursement methods. In what
way did retrospective reimbursement contain perverse financial
incentives?
○ In prospective reimbursement methods, certain criteria that are pre-established are
used to determine in advance the total amount of the reimbursement. The
retrospective reimbursement method is definite on actual costs earned by a
provider in the previous year and encourages providers to broaden their costs
because the cost would be reimbursed. The prospective system rewards providers
for controlling costs by eliminating the perverse incentives.
○ The prospective payment plan assigns a fixed rate of pay based on specific
treatments. Retrospective reimbursement contains perverse financial incentives because
providers only receive fixed rates and some providers might try maximizing their profits
by taking cost-cutting measures and not keeping their patients’ best interest in mind. This
may be because providers receive the same rate of pay no matter the quality of the care.
The prospective payment plans assign a fixed rate of pay based on specific treatments.
201
Quiz
#3
● Define retrospective and prospective reimbursement methods. In what
way did retrospective reimbursement contain perverse financial
incentives?
○ In prospective reimbursement methods, certain criteria that are pre-established are
used to determine in advance the total amount of the reimbursement. The
retrospective reimbursement method is definite on actual costs earned by a
provider in the previous year and encourages providers to broaden their costs
because the cost would be reimbursed. The prospective system rewards providers
for controlling costs by eliminating the perverse incentives.
○ The prospective payment plan assigns a fixed rate of pay based on specific
treatments. Retrospective reimbursement contains perverse financial incentives because
providers only receive fixed rates and some providers might try maximizing their profits
by taking cost-cutting measures and not keeping their patients’ best interest in mind. This
may be because providers receive the same rate of pay no matter the quality of the care.
The prospective payment plans assign a fixed rate of pay based on specific treatments.
