Question

What provider incentives are created under (a) cost-based reimbursement, (b) prospective payment, and (c) capitation?

Answer 1

Cost-based provider reimbursement refers to a common payment method in health insurance. Under cost-based reimbursement, patients' insurance companies make payments to doctors and hospitals based on the costs of the care provided to the patients. Cost based An incentive of cost based reimbursement is that it guarantees that a provider's cost will be covered by revenues generated from the delivery of those services however this reimbursement is limited to allowed costs.

A prospective payment system (PPS) is a term used to refer to several payment methodologies for which means of determining insurance reimbursement is based on a predetermined payment regardless of the intensity of the actual service provided. It includes a system for paying hospitals based on predetermined prices, from Medicare.

Capitation is a type of a health care payment system in which a doctor or hospital is paid a fixed amount per patient for a prescribed period of time by an insurer or physician association. Capitation is a payment arrangement for health care service providers. It pays a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care. The amount of remuneration is based on the average expected health care utilization of that patient, with payment for patients generally varying by age and health status.