Medicare Prospective Payment System

Abstract

In 1983, the Prospective Payment System was implemented by Medicare to pay hospitals a fixed fee for the inpatient services which they provide. Many benefits were anticipated from this payment change including increased hospital payment certainty and a reduction in net outflows from the Medicare Hospital Trust Fund. Many of the benefits anticipated by the system's architects have been achieved on both a national and local level. The literature research and a survey of Genesee County hospitals shows that payment certainty and extended Hospital Trust Fund life have occurred.