Prospective payment system (PPS)




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Taking the national average cost into consideration, CMS sets base rates for each PPS. The PPSs then add
provisions or adjustments to their system to account for situations where the cost of an individual episode of
care or service may be greater or lower than the national average. Pick three provisions or adjustments from
PPSs. Discuss why that provision or adjustment is needed. What would happen if that provision or adjustment
was discontinued? How would this impact facilities or providers? How would this impact the Medicare

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