In retrospective rate setting, what typically happens to interim payment rates?

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In retrospective rate setting, interim payment rates are typically adjusted after the period based on actual costs. This method involves first establishing tentative payment rates during the service period, which may not reflect the true costs incurred. Once the service period concludes, actual costs are analyzed, and the interim rates are recalculated to align more closely with those costs.

This approach allows for adjustments that ensure providers are compensated fairly based on the services provided and their associated costs. The goal is to reflect the true economic reality of delivering care, as providers may face varying expenses that need to be accounted for beyond initial projections. Thus, the true cost of providing care can be reconciled with the payments made, leading to adjustments that can either increase or decrease the interim rates based on actual performance.

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