In this assignment you will finalize your plan for the proposed healthcare facility by incorporating your work from Weeks 1 through 4 along with new content as described below Combine the work that yo

Reimbursement Models in Healthcare

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Healthcare Management Capstone in relation to financing health services

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Reimbursement Models in Healthcare

Summary of Reimbursement Methods

The three prevalent reimbursement mechanisms are capitation, fee-for-service, and bundled payment. Fee-for-services (FFS) is the payment method based on the procedures for which the patient or insurance company is liable for paying the healthcare provider's such as physician and hospital. This model is the predominant payment system in the United States; however, quality of care concerns has influence the healthcare provider to shift away from this model (Casto & Forrestal, 2013). This is because this approach reimburses care services regardless of their effect on patient health outcome. The payment for a particular service depends on the patient's insurance coverage.

For example, the Center for Medicare and Medicaid Services (CMS) determines the costs per code for Medicaid and Medicare; therefore, commercial and private insurers base their prices per code on a percentage of the Medicare price. The physician caring for patient with private insurance may be paid three times to treat a patient compared to what would have been paid to treat a Medicaid patient (Casto & Forrestal, 2013). FFS is frequently referred to as volume-based because the only option for healthcare providers to increase money is to conduct more healthcare procedures. FFS is accountable for creating an unsustainable healthcare system because its intrinsic financial incentive causes caregivers to prioritize increasing the number of billable visits, tests, and procedures over the patient's best interest.

The FFS offers complete freedom and adaptability to those who can afford it by permitting clients to freely select their physicians and hospitals with no intervention from insurance carriers (Reindersma et al., 2022). The second reimbursement model is the capitation reimbursement model, in which the provider is paid a predetermined sum per insured life each period regardless of the number of services rendered. Managed care organizations (MCOs) frequently adopt this payment approach to manage population health. In the capitation reimbursement structure, the health plan pays a monthly fee per member in exchange for an agreed-upon set of Medicare services, including preventive care, diagnostic procedures, immunizations, laboratory tests, and more (Casto, & Forrestal, 2013).

For example, a primary care physician handling 100 members of an HMO plan may receive $15 per person per month. The payment is made in advance for a specified period, regardless of whether the member seeks care. Patients with low utilization rates will automatically balance out those with greater utilization rates. The third reimbursement model includes a mechanism for bundled payments. Bundled payment, sometimes called episode-based payment, is the remuneration of health care providers based on the anticipated cost of clinically-defined episodes of care (Reindersma et al., 2022). The episodes cover various medical conditions, including prenatal care, hip replacement, and cancer.

The bundled payment combines compensation for fees for services and capitation. The bundled payment method incentivizes eliminating unneeded services and cutting costs. The provider has reimbursed a lump payment for all services linked to one episode of care instead of being reimbursed separately for each service, hence reducing the volume of services performed (Reindersma et al., 2022). The multiple providers that provide care during on each healthcare episode are paid a lump sum in addition to the hospital's payment. The bundle payment approach is intended to provide higher overall efficiency in patient management.

Bundle Payment and Capitation Reimbursement model for RHC

The reimbursement method applicable to rural health centers is the Bundle reimbursement payment (RHC). This model permits numerous providers to be paid a lump amount for providing care during an episode. Rural healthcare center (RHC) care providers will get a single payment for all episode-related services (Reindersma et al., 2022). The Capitation reimbursement can still be applied in the RHC for the patient, as the managed care organization, employers, or non-profit organization may pay a fixed amount per covered life period. This could be a year or month, and the target beneficiary will use the care regardless of the services provided. RHC's target audience consists primarily of elderly, low-income, rural individuals who are disadvantaged. Bundled payment would eliminate extra costs, hence improving efficiency. In contrast, capitation reimbursement will ensure that patients can access various services without limitation for a fixed fee payable by MCOs and others.

Pro and Cons of Reimbursement Method

In bundled payment, multiple providers are reimbursed for single sum for all services associated with each episode of care, thereby eliminating unnecessary procedures lead to cost reduction. Since the methodology is not volume-based, it will result to cost saving. Reducing unnecessary physician services, ensure there is prudent use of healthcare resources during hospitalization, and reduce post-discharge costs, especially those for unneeded post-acute care services (Siddiqi et al., 2017). If the cost of care exceeds the bundled payment, the provider is financially responsible. The Bundle payment will still generate savings if the discounted rate is negotiated at the outset or if the payment amount is modified and reduced to reflect the system's increased efficiency.

The cost and billing structure are more transparent to the patient. The patient's perspective enhances care coordination among all providers. Since care is integrated, complications and readmission are less likely, resulting in higher quality and better patient outcomes (Siddiqi et al., 2017). There is a propensity for providers to avoid high-risk patients or cases that potentially surpass the average episode payment because they do not like to assume liability. Since any extra cost is placed on the hospital and provider. The severity of the complication or the occurrence of financial outliers could significantly harm the bundled payment model. If the bundle price is too low, any major expenditure could invalidate any cost savings from the bundle, and the probability of this effect includes reducing patient care.

The benefit of the capitation reimbursement model includes increased physician payment model flexibility. There is higher incentive to promote and provide preventative care under capitation model. In contract negotiations with payers, physicians have more negotiating power than payers. Managing capitation systems is easier and more cost-effective because the only thing to keep track of is the number of enrolled members, thereby eliminating the need for complex billing codes (Siddiqi et al., 2017). The drawback of capitation is that patient choices are restricted. Patients must select physicians from inside the network since they are not permitted to select physicians from outside the network. Under the capitation system, the provider might are incentivize to accept more patients than they can realistically treat. The provider may be tempted to accept healthier patients to reduce expenses and increase profitability.

Impact Reimbursement methods have on the financial operation.

The reimbursement models selected such as bundled payment and capitation reimbursement may have a negative or positive impact on rural health centers (RHC) financial operations. First, RHC can select healthy patients to avoid incurring additional costs, but patients with chronic illness will expose RHC to high costs, which could have a large financial impact on RHC. In the case of the bundle payment model, the CMS may require payment for complications or readmissions that occur during a specified time frame. CMS will save money by reducing reimbursement for the healthcare facility, but this will increase the RHC financial risk.

References

Casto, A. B., & Forrestal, E. (2013). Principles of healthcare reimbursement (p. 371). American Health Information Management Association.

Reindersma, T., Sülz, S., Ahaus, K., & Fabbricotti, I. (2022). The effect of network-level payment models on care network performance: a scoping review of the empirical literature. International Journal of Integrated Care, 22(2).

Siddiqi, A., White, P. B., Mistry, J. B., Gwam, C. U., Nace, J., Mont, M. A., & Delanois, R. E. (2017). Effect of bundled payments and health care reform as alternative payment models in total joint arthroplasty: a clinical review. The Journal of arthroplasty, 32(8), 2590-2597.

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