Question

Which of the following statements about fee-for-service reimbursement is incorrect?

Payment may be cost based.

Payment may be charge based.

Payment may be on a prospective basis (specified beforehand).

Payment may be based on the number of covered lives.

Payment may be on a per visit basis.

Answer 1

Concepts and reason

Insurance: Insurance is the guaranteed amount on a person or asset that can be claimed on future period. It is completely based on uncertainty. It is a kind of protection involved in forecasting.

Prepaid Insurance: Prepaid insurance refers to the insurance expenses paid in advance. This is the kind of expenses which are paid but yet to be incurred during the accounting year.

Cost: Cost is any value spent to produce a product or to render any service. The types of costs are fixed cost and variable cost.

Fundamentals

Prospective basis: Prospective basis is the thing that is likely to happen in the future. If any change is insisted, it will be employed from future period. Past period is not considered.

Reimbursements: Reimbursement is the act of repayment to a person of what is spent of the money is being lost. Insurance company provides insurance to insurer in this way.

Fee-for-service imbursements: Fee-for-service reimbursement should not be cost based or others. It is purely based on the number of lives covered. It is a traditional pay method. The providers are reimbursed by the providers are healthcare.

Justify incorrect answer:

Fee-for-service reimbursement should not be cost based. It is based on individual service. Thus, it is not based on charge based. Prospective or retrospective basis is not a hindrance over the coverage. Beforehand is not taken. Similarly visit basis is not taken.

Therefore, cost, charge, prospective and visit bases are not appropriate for Fee-for-service reimbursement

Justify the correct answer:

Fee-for-service reimbursement should not be cost based or others. It is purely based on the number of lives covered. It is a traditional pay method. The providers are reimbursed by the providers are healthcare.

Therefore, fee-for-service reimbursements are based on the number of lives covered.

Ans:

Fee-for-service reimbursements are based on the number of lives covered.