What is the main goal of Prospective Payment Systems (PPS) in Medicare?

The main goal of Prospective Payment Systems (PPS) in Medicare is to control healthcare costs. PPS establishes predetermined rates for various services, which encourages providers to manage their resources more efficiently. By setting fixed payment amounts based on the diagnosis-related group (DRG) for hospital inpatient services, Medicare limits the financial risk for the program and incentivizes healthcare providers to provide necessary care without overspending. This system aims to ensure that Medicare expenditures remain sustainable while promoting cost-effective care delivery.

While increasing flexibility, enhancing patient satisfaction, and reducing the healthcare workforce may be relevant in various discussions about healthcare, they are not central objectives of the PPS itself. Instead, these aspects might be outcomes or secondary goals influenced by how the payment system operates. The primary focus of PPS is firmly on containing costs, making it a critical element in the conversation about Medicare financing and healthcare economics.