Published in 1997 in the "Journal of Economics and Management Strategy", McClellan's paper serves as a review and analysis of provider payment incentives resulting from the Medicare prospective payment system (PPS). Implemented in the 1980s, PPS was intended to incentivize hospitals to drive down costs by limiting the use of costly technologies that added little benefit. The hallmark of the program is the use of fixed payments via diagnosis-related groups (DRGs) in a prospective manner based on diagnosis at the time of admission. McClellan suggests that PPS may not optimally incentivize cost sharing among insurers and health providers due to the income effect by which hospitals may seek out particular diagnoses with higher reimbursement rates, akin to skimming in the insurance arena. Conversely, retrospective cost sharing allows for possible supply induced demand, minimizing the hospital's incentive to decrease resource utilization and costs in more complicated cases.