A classification system designed to standardize prospective payment for medical care.

A classification system designed to standardize prospective payment for medical care.

• A. Capitation
• B. Diagnostic Related Groups (DRGs)
• C. Managed care
• D. PPO

Answer: (B)

Grouping inpatient cases into Diagnostic Related Groups is the approach used to standardize payments in advance. Each DRG represents a family of similar diagnoses and procedures that typically require comparable levels of hospital resources. By assigning a patient to a DRG, the payer sets a fixed payment amount before care is provided, making reimbursement predictable and cost-controllable. This is what makes DRGs the mechanism behind prospective payment for hospital services. Capitation pays a fixed amount per enrolled patient per month to providers, not a hospital-specific classification system. Managed care is a broader delivery approach that can include capitation and various provider controls, but it’s not itself the classification system for hospital payments. PPO refers to a type of health plan within managed care, again not the payment-classification method used to standardize inpatient reimbursements.

Grouping inpatient cases into Diagnostic Related Groups is the approach used to standardize payments in advance. Each DRG represents a family of similar diagnoses and procedures that typically require comparable levels of hospital resources. By assigning a patient to a DRG, the payer sets a fixed payment amount before care is provided, making reimbursement predictable and cost-controllable. This is what makes DRGs the mechanism behind prospective payment for hospital services.

Capitation pays a fixed amount per enrolled patient per month to providers, not a hospital-specific classification system. Managed care is a broader delivery approach that can include capitation and various provider controls, but it’s not itself the classification system for hospital payments. PPO refers to a type of health plan within managed care, again not the payment-classification method used to standardize inpatient reimbursements.