Medical Coding Practice Test

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What type of payment method does DRG (Diagnosis Related Groups) represent for hospital inpatients under Medicare and other third-party payers?

  1. Case-by-case payments

  2. Fee-for-service payments

  3. Prospective payments

  4. Retrospective payments

The correct answer is: Prospective payments

DRG (Diagnosis Related Groups) represent prospective payments for hospital inpatients under Medicare and other third-party payers. Prospective payment systems involve predetermined payment amounts based on the patient's diagnosis, regardless of the actual costs incurred by the hospital. This method aims to control healthcare costs and encourage efficiency in providing services by hospitals. This differs from fee-for-service payments where providers are reimbursed based on the services provided and retrospective payments where reimbursement is based on actual costs after services are rendered.

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