A nurse is reviewing health care cost reduction strategies with a group of newly hired staff members. The nurse explains that under a prospective payment system, hospitals receive a predetermined fixed payment for each patient admission based on diagnosis-related groups (DRGs). Which statement by a staff member indicates understanding of how this system aims to reduce health care costs?
- "The payment amount increases proportionally with the number of diagnostic tests ordered."
- "Patients are required to pay out-of-pocket for any costs that exceed the DRG payment amount."
- "Hospitals are reimbursed for all services and procedures provided regardless of length of stay."
- "This system encourages hospitals to provide cost-effective care and discharge patients when medically appropriate."