What way did retrospective reimbursement contain perverse financial incentives?

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HLT 205 Topic 3 DQ 2, Response and Discussion

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HLT 205 Topic 3 Discussion Question 2, Response and Discussion: Define retrospective and prospective reimbursement methods. In what way did retrospective reimbursement contain perverse financial incentives? Use a reference to support your response.

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Retrospective reimbursement method was based on actual cost the providers assumed the previous year. On this method rates were evaluated retrospectively and costs were used to determined the amount paid to the provider and had no incentive to control cost. On the other hand, prospective reimbursement methods can determine in advance how much a provider is going to get compensated. (Shi & Sing, 2017) The way retrospective reimbursement contain perverse financial incentives happened when institutions increased their profits by increasing costs and this system payment method was based on costs. Due to this issue the method was changed to the prospective to avoid abuse of the system.

What are the differences between the retrospective and prospective methods of reimbursement quizlet?

Retrospective reimbursement is based on the actual resources expended to deliver the services and is finalized after the services are delivered. Prospective reimbursement is established prior to the healthcare delivery and does not change based on the costs of the actual services delivered to the patient.

What is the most common type of prospective reimbursement?

The most common type of prospective reimbursement is a service benefit plan which is used primarily by managed care organizations. Most insurance policies require a contribution from the covered individual which may be a copayment, deductible or coinsurance which is called cost participation.