What defines a Prospective Fee Schedule?

A Prospective Fee Schedule is characterized by predetermined payment rates set in advance for specific services or procedures, typically established through negotiations between healthcare providers and payers. This system contrasts with other payment models that may involve retrospective payment approaches or payment variations based on individual patient visits.

In a prospective payment system, the payment amount is determined prior to the service being provided, allowing for greater predictability in budgeting and financial planning for both providers and payers. This structure helps streamline the billing process and provides clarity on reimbursement levels for each service, ultimately aligning with the principles of managed care and efficiency in healthcare delivery.

Understanding the nature of prospective payment systems is crucial for medical practices, as it influences the financial operations and patient care strategies within the practice.