Question

6. Why have many insurers replaced retrospective reimbursement methods with prospective payment methods?

7. What are advantages of capitated payments for providers and payers?

10. Why is the constant trend of increased national spending on healthcare a concern?

Answer 1

Why have many insurers replaced retrospective reimbursement methods with prospective payment methods?

To answer this question you need to know that the payments are determined on a retrospective or prospective basis. Retrospective payment means that the amount is paid which is determined by the provider charged or its cost to provide the service after tests or services rendered to beneficiaries.

In the retrospective payment plans the insurance company, pay healthcare providers based on their actual charges. But in case of

retrospective payment plan, a provider will treat a patient and submit an itemized bill to an insurance company detailing the services rendered.

This means that it is system wherein reimbursement is made to the provider based on a predetermined reimbursement level rather than on actual charges after the services have been provided.

What are advantages of capitated payments for providers and payers?

There are various advantages of capitated payments, just like in any health care payment system. Some of the advantages are intended to reduce costs and increase quality of care. Here to manage this system is easier and more cost effective because you need to keep a track of the number of enrolled members. There is no need to use complicated billing codes or to fill out involved paperwork or claims. Due to this system the cash flow is more predictable for providers, and members have more predictable health care costs, which results in good budgeting as it is easier, since you know how much money is coming in or going out.

Since this is more cost effective the preventative care becomes a strong focus for providers than treating complex and chronic health issues later. This could be better for members who might experience increased health over the long haul. These minimize the procedure of unnecessary interventions, tests and care because physicians are looking to keep costs down in order to maximize their profits. In this synario, the patients are not needed to be concerned about paying for extra tests or procedures that are not truly needed.

Why is the constant trend of increased national spending on healthcare a concern?

This increased spending is the concern of the nation as the resources of finance is limited. As spending on healthcare increases, the money available for other sectors of the economy decreases. Here the healthcare system is complex because it is actually multiple subsystems rather than a single system. It is a system of reducing a person's exposure to risk of loss by having another insurance company who assumes the risk. In healthcare, it is presumed that a person will get sick or require health services and will incur bills associated with his treatment or services. This is paid or compensated for expenses already incurred as in the case of health care, for services already provided and physicians and clinics must be paid back for services that they have already provided.