Prospective payment is distinguished from the imposition of a regulatory ceiling on hospital costs. While a regulatory ceiling could potentially be effective in controlling expenditure growth, its success depends upon the political climate. Prospective payment, as a distinct financial policy, offers little cost-containment potential. It is more appropriately evaluated in terms of its effects on the distribution of risk between providers and third parties and on the trade-off between investment and current consumption.
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Richard W. Foster; Cost-Based Reimbursement and Prospective Payment: Reassessing the Incentives. J Health Polit Policy Law 1 April 1982; 7 (2): 407–420. doi: https://doi.org/10.1215/03616878-7-2-407
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