A prospective payment system involves hospitals being paid a fixed sum per case according to a schedule of diagnosis-related groups.

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A prospective payment system (PPS) is a method of reimbursement used in the United States to pay hospitals and other healthcare providers a fixed amount for each patient encounter based on a predetermined set of criteria, which typically includes the patient's age, medical history, and diagnosis. This system is based on diagnosis-related groups (DRGs), which are categories of patients with similar diagnoses and treatment plans. Hospitals are paid a fixed sum per case according to a schedule of DRGs, regardless of the actual cost of providing care to each patient.

A Prospective Payment System Involves Hospitals Being Paid a Fixed