Health Care Reimbursement
Based on the political and economic environments of states and the federal government the methods of health care reimbursement have been required to evolve. With the introduction of the Patient Protection and Affordable Care Act (PPACA) new laws have been set into place that has caused a stringent review of spending on health care. All care provided is being examined for effectiveness, quality, and the actual need of the service. Unnecessary health care functions are being screened and eliminated. The government and other insurance providers have begun to place cost containment measures in place only paying for those procedures that are deemed medically necessary for the illness that the patient is currently afflicted with. This has a direct impact on the monies that the government and insurance providers will reimburse for services. The following paper will look at the major types of reimbursement activates currently in place. The writer of this paper will also speculate on the future of health care reimbursement and how it will affect his current organization.
Health Care Reimbursement Activities
One method of reimbursement aimed at controlling costs is the use of diagnosis-related groups (DRG). Medicare uses the DRGs to place inpatients into one of over 1000 categories based on the medical condition citied for admission. This is a prospective payment system that shifts the responsibility to the provider for more cost efficient care. For each of the DRG a set amount is predetermined for the cost of care. Payment is affected by location, wages indices, and type of facility so there is a customized “weight” on the amount received. However, the payment process is the same across all institutions. It is in the best interest of the provider to not exceed the allotted amount for care since as it will not be reimbursed (Zelman, McCue, & Glick, 2009).
Ambulatory payment classification (APC) is similar to DRGs but pays for bundled hospital-based outpatient services instead of inpatient care. The government established this payment system as part of the Balanced Budget Act of 1997 to control cost. With few exceptions most hospital outpatient based services are categorized into groups and given a fixed reimbursement rate for services rendered. APCs have begun to extend into new service areas such as imaging and emergency care (Zelman et al., 2009).
Capitation is an agreement that a provider makes with an insurance entity to provide services to a specified population. Under this agreement the insurance entity will pay the health care provider a predetermined amount to provide approved services to the covered population. This agreement works best in a large population. Whether the members covered utilize the provider’s services or not the provider will receive payment. This is sometimes referred to as a risk pool where risk can be spread amongst the members. The arrangement places the burden of cost control...