“The complexity of financing in health care is one of the primary characteristics of medical care delivery in the United States” (Shi & Singh, 2012, p. 129). There are numerous reimbursement methods (e.g., capitation, fee-for-service, package pricing, etc.) that are used by health care organizations and providers to get paid for the health care services that they provide. Building upon your Individual Project from Unit 1, write a 3-5 pages not including a title page and reference page that contains the following:
Summarize 3 different reimbursement methods that are used by health care providers and organizations.
Choose which method(s) will work best for the health care facility that you have proposed to be developed, and explain why you chose that method(s).
Discuss the pros and cons of the reimbursement method(s) that you chose.
Discuss the impact that the method(s) may have on the financial operations of the facility that you chose.
Full Answer Section
Bundled payments are a type of reimbursement method in which providers are paid a fixed amount of money for a group of related services. For example, a provider might be paid a bundled payment for all of the services associated with a hip replacement surgery. This method is designed to encourage providers to coordinate care and to reduce costs. However, bundled payments can be complex to administer, and they can also lead to disputes between providers and payers.
Choosing a Reimbursement Method for a New Healthcare Facility
The best reimbursement method for a new healthcare facility will depend on a number of factors, including the type of care that the facility will provide, the population that the facility will serve, and the payer mix (i.e., the mix of public and private payers) that the facility will have.
For a new healthcare facility that is focused on providing preventive care and managing the overall health of its patients, capitation may be a good option. Capitation can help to align the incentives of the provider and the payer, as both parties have an interest in keeping the patient healthy.
For a new healthcare facility that is providing specialized care, such as surgery or cancer treatment, bundled payments may be a good option. Bundled payments can help to promote coordination of care and reduce costs.
However, it is important to note that no single reimbursement method is perfect. All three of the methods described above have their own pros and cons.
Pros and Cons of Capitation
Pros:
- Encourages providers to focus on preventive care and to manage the overall health of their patients.
- Can lead to lower costs for payers.
- Can improve the quality of care.
Cons:
- Can lead to underutilization of services.
- Can be difficult to administer for complex cases.
- Can lead to disputes between providers and payers.
Pros and Cons of Bundled Payments
Pros:
- Encourages providers to coordinate care and reduce costs.
- Can improve the quality of care.
- Can be more predictable for providers and payers.
Cons:
- Can be complex to administer.
- Can lead to disputes between providers and payers.
Impact on the Financial Operations of a New Healthcare Facility
The choice of reimbursement method will have a significant impact on the financial operations of a new healthcare facility.
Under capitation, the facility will receive a fixed amount of money per patient, regardless of the number of services that the patient uses. This can help to ensure a stable revenue stream for the facility. However, it is important to make sure that the capitation rate is set at a level that is sufficient to cover the facility's costs.
Under bundled payments, the facility will receive a fixed amount of money for a group of related services. This can help to reduce the risk of financial losses for the facility. However, it is important to make sure that the bundled payment rates are set at a level that is sufficient to cover the facility's costs.
Under FFS, the facility will be paid for each individual service that it provides to patients. This can lead to higher revenue for the facility, but it can also lead to higher costs.
Conclusion
The choice of reimbursement method is an important decision for any new healthcare facility. The best method will depend on a number of factors, including the type of care that the facility will provide, the population that the facility will serve, and the payer mix that the facility will have.
It is important to carefully consider the pros and cons of each reimbursement method before making a decision. The choice of reimbursement method can have a significant impact on the financial operations of the facility.
Sample Answer
Fee-for-service (FFS) is the most common reimbursement method in the United States. Under FFS, providers are paid for each individual service that they provide to patients. This method is relatively simple to administer, but it can lead to overutilization of services, as providers have an incentive to provide more services in order to earn more money.
Capitation is a reimbursement method in which providers are paid a fixed amount of money per patient, regardless of the number of services that the patient uses. This method is designed to encourage providers to focus on preventive care and to manage the overall health of their patients. However, capitation can also lead to underutilization of services, as providers may have an incentive to limit the amount of care that they provide in order to maximize their profits.