The method of reimbursement that establishes the rate of payment to a hospital before services are rendered is:

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Prospective payment system (PPS) establishes the rate of payment to a hospital based on a predetermined amount for a specific diagnosis or procedure, regardless of the actual cost of providing the service. This method of reimbursement is used by Medicare and other payers to control healthcare costs and encourage efficiency in healthcare delivery. Capitation (A) involves paying a fixed amount per patient per month to a healthcare provider, regardless of the services provided. Fee for service (B) involves paying for each service or procedure performed, which can create incentives for healthcare providers to over-treat or provide unnecessary services. Per diem (C) involves paying a fixed rate per day for hospital services, which can also create incentives for providers to over-treat or keep patients in the hospital longer than necessary.

The Method of Reimbursement That Establishes the Rate of Payment