Healthcare Reimbursement Methods

Healthcare Reimbursement Methods

Fee-for-Service Reimbursement

Fee-for-service reimbursement is a way of paying providers where they get paid for each service they give. This is the most common way to get paid back in the United States, and most health insurance companies use it. In this system, providers are paid a set amount for each service, like a doctor’s office visit or a lab test. Providers like this method because it lets them make as much money as possible by giving as many services as possible. The problem with this system is that it can lead providers to provide too many benefits, which can drive up costs for both patients and insurers.

Capitation Reimbursement

Capitation reimbursement pays providers who get a set amount for each patient they treat, no matter what services they give. This method appeals to providers because it lowers the chance they won’t get paid for their services and promotes preventive care. Under this system, providers get paid a set amount per patient per month and are expected to give that patient all the necessary services. Insurers like this method because it reduces the chance that services will be used too much.

Bundled Payment

Bundled payment is a way of paying providers in which they get paid for a single episode of care instead of for each service they give. In this system, providers are paid a set amount for services related to a specific condition, like a hip replacement or giving birth. Providers like this method because it makes care more efficient and less expensive. It also appeals to insurers because it helps keep costs down by incentivizing providers to provide the best care for the least amount.

Which one works best for an ambulatory care facility?
A combination of fee-for-service and capitation reimbursement is probably the best way for an ambulatory care facility to get paid. Fee-for-service lets the facility make as much money as possible by providing as many services as possible. Conversely, capitation encourages preventive care and lowers the risk of using too many benefits. Also, bundled payments incentivize doctors to provide the best care for the least amount of money and help keep costs down.

Pros and cons of different ways to get paid

Fee-for-Service:

Pros:

• Encourages providers to offer a wide range of services
• Allows providers to maximize their income

Cons:

• Can lead to overutilization of services
• Can result in inflated costs for patients and insurers

Capitation:

Pros:

• Reduces the risk of not being paid for services
• Encourages preventive care

Cons:

• Can lead to inadequate care if providers are not paid enough
• Can result in reduced quality of care if providers are not paid enough
Bundled Payment:

Pros:

• Encourages efficient and cost-effective care
• Provides an incentive for providers to provide the most cost-effective care possible

Cons:

• May not be suitable for all types of care
• Can be challenging to set up and administer

Impact on Financial Operations

Any of the above reimbursement methods could significantly affect how an ambulatory care facility manages its money. Fee-for-service reimbursement could bring in more money for the facility if it lets providers make the most of their money. Capitation reimbursement could help the facility save money by making it less likely that it won’t get paid for services. And bundled payments could help the facility save money by incentivizing them to provide the best care for the least amount. Using any of these methods could also help the facility better manage its cash because it will have a better idea of how much it makes and spends.

References

Shi, L., & Singh, D. A. (2012). Delivering Health Care in America: A Systems Approach. Burlington, MA: Jones & Bartlett Learning.

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Description

“The complexity of financing in health care is one of the primary characteristics of medical care delivery in the United States” (Shi & Singh, 2012, p. 129). There are numerous reimbursement methods (e.g., capitation, fee-for-service, package pricing, etc.) that healthcare organizations and providers use to get paid for the healthcare services that they provide contains following:

Healthcare Reimbursement Methods

• Summarize three different reimbursement methods that healthcare providers and organizations use.
• Choose which method(s) will work best for the health care facility you proposed to be developed, and explain why you chose that method(s).
• Discuss the pros and cons of the reimbursement method(s) that you chose.
• Discuss the impact of the method(s) on the financial operations of the facility you chose.