Certified Rehabilitation Registered Nurse (CRRN) Practice Exam

What type of payment approach shifts part of the financial risk to hospitals by offering a fixed amount based on diagnosis?

1. Fee-for-service payment

2. Capitation payment

3. Prospective payment

4. Global budget payment

The correct answer is: Prospective payment

The appropriate choice is prospective payment, which effectively transfers part of the financial risk to hospitals by establishing a fixed payment amount that is determined prior to the provision of services, based on the diagnosis of the patient. This system incentivizes hospitals to manage resources efficiently, as they receive a set payment regardless of the actual costs incurred during treatment. For example, in prospective payment systems, payments are often established through classification systems like Diagnosis-Related Groups (DRGs), where each diagnosis correlates with a predetermined payment that covers a range of hospital services. This encourages facility operations to prioritize cost-effective care and can potentially lead to improved outcomes if managed well. In contrast, fee-for-service payment models reimburse hospitals based on the services provided, which can encourage higher service volume without regard for efficiency. Capitation payments typically involve paying providers a fixed amount per patient, but this model applies chiefly to outpatient services and may not reflect the complexities of inpatient care. Global budget payments are structured to provide a lump sum for all services within a defined period but generally do not focus specifically on diagnosis-related payments like prospective payment does.