Healthcare Reimbursement Methodologies, Essay Example

Reimbursement is a healthcare term that is used to mean repayment for healthcare services provided. This is to means that the term refers to being repaid for expenses that have already been incurred on health services already rendered. These payments are normally made by a third party to the second party which refers to the health insurance company and the health service provider respectively. The first part refers to the individual client that receives health services from a given health service provider. There are different types of methodologies that are involved in these processes; they are categorized as fee-for service reimbursement and episode-of-care reimbursement.

Fee for Service Reimbursement

In this category of health care reimbursement, healthcare providers receive their payment for every service they provide. A fee is paid by the health insurance company on each and every specific service provided by the healthcare service provider or the second party. The fees that that are settled in these transactions are referred to as charges in healthcare. A claim is prepared listing all the charges/ costs or fees involved in a given healthcare service transaction and sent to the health insurance company for payments. This process of sending the claim is commonly referred to as submitting the claim. The advantage for this category is that the patient assumes independence in decision making about from whom to receive treatment from and how to receive the treatment. Some of the disadvantages to it are that, the method is characterized by higher deductibles than the other types of health insurance and have higher deductibles. They also have the disadvantage of uncertainty in costs reimbursed to the providers (Steve, 2006). The main examples under this category include Self-pay managed care, and retrospective payment.

In self-pay is part of the fee-for-service category because the patient or his/her guarantor pays a specific fee for every service rendered to the health service provider. This type of reimbursement applies where the patient hasn’t registered for any health insurance policy. Close to this method is the self-insured plan where the employee takes on all their employee’s health provision costs. Retrospective method is where the healthcare providers are reimbursed by the health insurance company after the health service has been provided. In managed care methods, the insurance company manages the costs incurred in healthcare provision while making sure that the quality of healthcare service provided is not compromised. That is, the method is characterized by two main objectives: reduction in costs of healthcare that the insurance company reimburses to the healthcare providers and ensures increased quality of healthcare provided.

Episode of Care Reimbursement

In this methods category, the healthcare providers receive a lump sum payment for the costs of services rendered in a given episode of healthcare. The unit of payment is an episode in this reimbursement methodology. Episode of care refers to the health care services provided by a given healthcare provider for a particular illness and for a given period of time (John, Cheryl, & Sheila, 2009). In this method a given amount is set for all care attributed to a given health condition. Examples in this category include capitation, prospective payment and global payment.

In capitation, the health insurance company reimburses a fixed per capita amount to the provider for given period of time. In this case, the actual volume of care provided has no effect on the amount to be paid. In global payment method, the insurance company or third party payer makes a combined payment to a multiple number of providers treating the same episode of care. There is also no effect of the volume of services provided to the amount paid (Blount & Waters, 2001). Prospective payment on the other hand is where a predetermined rate is made based on the average levels of resources expected to be used for given particular health care. It is divided into pre-diem payment where payment is calculated for a specific rate per day and case-based payment where they are calculated at a flat rate per case.

For the future of the reimbursement methodologies, it is clear to see that the prospective payment system has been more successful in handling healthcare reimbursements. Most of these methodologies will shape up into this method but with some refinements in some sections. The refinements will be in the physician care groups, clinical risk groups, and the case based payment methods. The physician care group is a prospective payment method for physician healthcare services in ambulatory settings (Longest, Rakich, & Darr, 2000). This payment method will account for resource use in physician services, technical services, interpretations, facility overheads, and the ancillary services. It will also account for the differences in the ambulatory settings. There will be a refined case-based method that will include patient from different regions on the world, age groups and with varying categories of illnesses. For researchers have created a classification method that is independent of resource consumption, patients’ illness severity, and coding systems. The clinical risk groups are prospective payment methods that predict the future health expenditures. They classify patients in terms of illness severity and predict the costs to be incurred in future on medical care.

This article brings out clear stipulations that increase my awareness of the importance of financial management as trends in the healthcare finance have kept on changing since times in the past. In re-enlightens me that if the financial risk management is not well taken care of can in itself increase healthcare financial risks. It points out that the reason why this issue is important is that the most of the challenges facing healthcare department is the uncertainties in the financial contract negotiations between third party payers and the healthcare providers. Therefore due to the changing times, the finance function of a healthcare provider must support cost control mechanisms, managed care, joint venture decisions and participation in a form of integrated system of delivery.

The article would be more perfect if it would provide more comprehensive recommendations on best reimbursement methods that would increase efficiency in the healthcare finance or reimbursement sector; if it provided clear cut reasons for support of a given set of financial terms that if adopted by healthcare providers in their contractual terms with the third party payers will help reduce the financial risks present in the current systems.

References

Blount, L. L. & Waters, J. M. (2001). Managing the Reimbursement process. (3^rd ed). Chicago: AMA Press

John, C. L., Cheryl, C. & Sheila, O. (2009). Designing and Implementing Health Care Provider Payment Systems: How-to Manuals. World Bank Publications

Longest, B. B., Rakich, J. S. & Darr, K. (2000). Managing Health Services Organizations and Systems. (4^th ed.). Baltimore: Health Professions Press.

Steven, F. (2006). Accounting Fundumentals for Health Care Management. Jones & Bartlett Publishers.