What type of payment structure does Medicare Part A utilize for skilled nursing care?

Medicare Part A employs a prospective payment system (PPS) for skilled nursing care, which means that payments are predetermined based on specific criteria rather than being based on the actual costs incurred during the care process. This system is designed to provide a set payment amount for care provided, depending on the patient's diagnosis and the type of care they require, which is categorized using the Resource Utilization Groups (RUGs).

The prospective payment model incentivizes healthcare providers to operate efficiently, as they must manage their services within the fixed payment amount. This approach helps control costs for Medicare while also aiming to maintain a level of quality care. Under this system, the payment is established in advance, based on historical data and cost analysis rather than on the individual services rendered after the care has been provided.

In contrast, other payment structures, such as fee-for-service, would reimburse providers for each service rendered; capitation involves a set payment per patient regardless of the number of services provided; and a retrospective payment system would calculate payments after care is delivered, which does not align with the method used in Medicare Part A for skilled nursing care.