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The prospective payment method is a reimbursement system used in healthcare where providers receive a predetermined payment for each case or episode of care, regardless of the actual costs incurred. This method contrasts with fee-for-service models, where providers are reimbursed based on the quantity of services rendered. Prospective payment systems aim to control costs and promote efficiency by standardizing payments for specific diagnoses or procedures. One common example is the Diagnosis-Related Group (DRG) system used for hospital reimbursements, where payments are based on the diagnosis and severity of illness rather than the actual costs of services provided.