Healthcare Reimbursement Practice Exam 2025 - Free Healthcare Reimbursement Practice Questions and Study Guide

The Balanced Budget Act of 1997 aimed to implement a Prospective Payment System (PPS) for home health services. This system was introduced to control costs and improve the efficiency of Medicare spending on home health care. Under the PPS, agencies are reimbursed a predetermined, fixed amount for home health care services based on the patient’s condition and needs, rather than billing for each individual service provided. This shift encourages providers to offer efficient care while also ensuring that patients receive the necessary services without excessive billing for unneeded treatments.

The move to a PPS structure was significant in reshaping how services were delivered and reimbursed, promoting better financial predictability for both providers and payers. It also incentivizes agencies to manage care more effectively while maintaining patient outcomes, as organizations would benefit financially from improving service delivery rather than increasing the volume of services performed.