What term refers to the payment model where providers can profit by maintaining costs under a set rate?

The term that refers to the payment model where providers can profit by maintaining costs under a set rate is known as Prospective Rate-Setting. This model establishes a predetermined rate for services before they are rendered. Providers who can deliver services at a cost lower than the set rate may retain the difference as profit, incentivizing efficiency and cost control. This system encourages providers to optimize their operations and find savings, as their profitability directly correlates with their ability to manage expenses effectively within the constraints of the agreed-upon rates.

In contrast, Cost Efficiency Model typically focuses on the idea of reducing costs without a standardized payment approach, while Fixed Payment Model refers more broadly to agreements where a fixed sum is paid rather than addressing how providers might profit under cost constraints. Cost-Plus Pricing, on the other hand, is a model in which prices are determined by adding a specific markup to costs, which does not inherently create a profit incentive based on cost management compared to the predetermined rates established in Prospective Rate-Setting.