- Describe the types of reimbursement in the healthcare market and provide an
example of each
There are multiple ways to get reimbursement within the healthcare market. To simply the types, the reimbursement methodologies are often sub- grouped under fee-for-service (FFS) payment or capitation. To begin, there is cost-based reimbursement, this falls under the FFS payment. The consumer is responsible for payment of costs that have been incurred while providing treatment (Reiter & Song, 2021) For example, the payer can make periodic payments while still receiving care but will be charged in full once the set number of services needed are completed.
Charge based reimbursement is used when the provider sets pricing for their services. This is also under the FFS payment. As mentioned in (Reiter & Song, 2021), when this reimburse plan is in effect many conventional insurance companies have power to negotiate cost with providers. This allows providers to contain costs and increase profits by increasing the volume of services. For example, someone might have a cariology consult where a set number of labs and imaging are needed. The provider may have their own pricing for those services as opposed to others in the market. These gross prices are also referred to as a charge-master.
The prospective payment system is also categorized under FFS reimbursement. In this specific system, costs are set by the provider at a fixed rate prior to any services being offered. This differs from the chargemaster due to the fact the payer is paying per procedure and/or per diagnosis. Per procedure is commonly used for outpatient visits whereas per diagnosis is commonly used in inpatient hospital stays. Providers/hospitals will seek payers that best fit patients that they can treat and diagnosis. For example, a specific surgical specialty hospital can use these methods as they can choose to charge a fee for a surgical procedure or diagnosis.
The per-diem payment is also an FFS method. Under this plan, the payer pays a set amount for each inpatient day. This is only applicable to inpatient hospitals. Meaning, providers can bill for whatever services they have used daily. For example, if someone is admitted post-operatively and is pending discharge. Their entire price of length of stay can vary based on day-to-day testing/interventions. If they were to be transferred from an inpatient surgical unit to an ICU unit this was change the cost of their stay for those ICU days based on type of services provided.
A bundled payment is an FFS of a single payment made all at once for each service (Reiter & Song, 2021). An example, this can be applied to surgical procedures. The cost of care/services provided can be from pre-op workout, actual operation and post operative care. The payer will be paying one whole payment to cover all the costs incurred. Lastly, capitation reimbursement is when the provider gets paid at a fixed rate at monthly rate. This type of payment is managed by care plans such as the HMO plan. An example, primary care providers are gatekeepers of care. They may only refer patients to specialized care/procedures if they are deemed medically necessary. Providers who are reimbursed under this plan have the incentive to reduce health care costs by decreasing the use of unnecessary testing.