Question

do healthcare organizations have a choice in reimbursement model? what affects their options ?

Answer 1

Healthcare organizations have a choice in reimbursement model. Before understanding this, we need to know how it works, then we will understand how it affects their options.

Healthcare reimbursement describes the payment that your hospital, doctor, diagnostic facility, or other healthcare providers receive for giving you a medical service.

Often, your health insurer or a government payer covers the cost of all or part of your healthcare. Depending on your health plan, you may be responsible for some of the cost, and if you don't have health care coverage at all, you will be responsible to reimburse your health care providers for the whole cost of your health care.

Typically, payment occurs after you receive a medical service, which is why it is called reimbursement. There are several things you should know about health care reimbursement when you are selecting health insurance coverage and planning your health care.

Here are the five most common methods in which hospitals are reimbursed:

1. Discount from Billed Charges. ...
2. Fee-for-Service. ...
3. Value-Based Reimbursement. ...
4. Bundled Payments. ...
5. Shared Savings.

1. Fee-for-Service. A system of provision of care where the health provider is paid a fee for each service or supply provided. Fees are billed at rates established by the provider. Fee for Service is not a form of managed care. Retrospectively, patients may receive reimbursement for health care services under a fee schedule. Fees and reimbursements from any applicable insurance arrangement based on a complex variety of factors, including the number and type of services provided, standardized coding system, the geographic area of service, and certain office and training expenses of the provider.
   
2. ​Fee-for-Service with Utilization Review. This is similar to Fee-for-Service, with the addition that the third party payer assumes the power to authorize, deny, or limit payment for health care interventions. (Bodenheimer, Grumbach; Understanding Health Policy)
   
3. Health Maintenance Organization (HMO). A managed care arrangement consisting of a health care organization that acts as both insurer and provider of comprehensive but specified medical services. Most services are financed through prospective per capita (capitation) payments. The organization has responsibility for managing the provision of comprehensive health care services and typically provides preventive care. Depending on whether the services are organized under a staff or group model versus being contracted with clinicians separately, services are provided at organization's own facility or those hospitals, clinicians, and clinics with which it has a network agreement for the provision of care. Typically, primary care clinicians coordinate and refer patients for treatment while acting as the gatekeeper through whom the patient has to go to obtain other health services such as specialty medical care, surgery or physical therapy.
   
4. Independent Practice Association (IPA). A network of private physicians, other health care professionals, and facilities in which insurers contract with the provider or facility. Rates for fees are negotiated separately with each provider or facility. (Bodenheimer, Grumbach; Understanding Health Policy)
   
5. Managed Care. An organized way to manage the cost, use, and quality of the health care system. There are several major forms of managed care that are described below.
   
6. ​Pay-for-performance (P4P). A payment model that links quality of care with the level of payment for healthcare services. Reimbursing agencies, including Medicare, have various initiatives to encourage improved quality of care in all healthcare settings, including physicians’ offices and ambulatory care facilities, hospitals, nursing homes, home health care agencies and dialysis facilities.
   
7. Point-of-Service (POS). A managed care arrangement consisting of a hybrid network model that combines features of an HMO and PPO. Like an HMO or PPO, the patient only pays a co-payment or low co-insurance for contracted services within a network of preferred providers for what is termed in-network care. However, like traditional fee-for-service insurance, enrollees have the flexibility to seek out-of-network care under the terms of traditional indemnity plans with a deductible and a percentage co-insurance charge.
   
8. Preferred Provider Organization (PPO). A managed care arrangement consisting of a group of hospitals, physicians, and other providers who have contracts with an insurer, employer, third party administrator, or other sponsoring group to provide health are services to covered persons. The preferred providers are often subject to other stipulations regarding the monitoring of utilization, the appropriateness of care provided, and the terms of the provision of care allowed under the arrangements. While the patient does have some flexibility in health care decisions and selecting providers, through self-referrals both inside and outside the network of PPO providers, patients have financial incentives to select PPO network providers.
   
9. ​Prepaid Group Practice. A multi-specialty group of physicians or other health professionals who contract to provide services on an ongoing or continuous basis to a group of enrollees.

The effects of the ACA on provider reimbursement will manifest in the short and long term. The more immediate changes to provider reimbursement may include a sudden increase in patients - while long-term plans are being formed around a new generation of payment and care delivery models.