Question

Risk-Based Reimbursement

For your assignment, a primary care physician is often reimbursed by Health Maintenance Organizations (HMOs) via capitation, fee-for-service, relative value scale, or salary. Capitation is considered as a risk based compensation.

In an effort to understand the intricacies involved with physician reimbursement, particularly in an era of health care reform, identify and interview an expert in the field, such as:

Hospital Administrator

Managed Care Organization (MCO) executive

Health care Consultant

Legal Professional

Assumption: MCOs use risk-based reimbursement for primary care physicians.

Ask the following questions in the interview:

What kind of risk do the MCOs assess?

Does risk-based compensation limit the freedom of primary care physicians in any way in terms of patient care? Why or why not?

How does the capitation model of reimbursement work? Do physicians generally prefer one model over the other? Why or why not?

Why do HMOs prefer the prepaid, monthly premium?

Is pay-for-performance a better model than existing models of compensation? Are there limitations to it as well?

Answer 1

Introduction: The government emerged as a good manager of its healthcare system than the private sector. This occurrence raised concerns as the cost of health insurance and medication went on the rise and greatly affected the employers. A variety of techniques intended to reduce the cost of providing health benefits and improve the quality of acre were instituted in the United States of America and were adopted by various organizations. The managed care organizations were stimulated into being by the enactment of the Maintenance organization Act of 1973.The management care industry has gone on to achieve a lot more than it is appreciated (Hyatt & Hopkins)

Risks Assessed by the MCOs:

The executives of Managed Care Organizations have a lot to do in terms of the risks to be assessed for they are numerous in number. Physicians are at the center of the organizations as integration and arrangements become complicated every day. The contracting of physicians comes along with risks. Aspects of location, market comparability and specialty are of key importance to the executives. Legal changes continue to change requiring the MCOs executives to constantly adhere to the very change which comes along with risks. The risks affecting healthcare networks and systems that are of key interest to the MCOs executives revolve around the discipline of business as issues to do with joint ventures, It implementation, introduction of rules, management of denials among other variables are prevalent. It is important to understand the dynamics of the environment for the MCOs executives ((Welker, 2015).

Risk Based Compensation:

Every model of compensation, a type of risk based compensation is unique in its design; this uniqueness leads to limitation of the physicians in terms of health care. Capitation, for instance is touted to be for specialists, not for primary care physicians as many doctors have argued that it can lead to many referrals. Fee for performance is preferred for primary care. The fee for service model limits patient care as the physician can only tend to the services paid for. Each model in unique and ultimately limits the extent of patient acre that can be extended (Frank, McGuire, & Newhouse, 1995)

Capitation Model of Reimbursement:

Even though various surveys indicated that the patients and primary physicians are happy with the choices of specialists and the care, there is an underlying dissatisfaction from physicians as the model limits their professional autonomy. The patients enrolled on the physician roster may require care outside the scope of the physician (Kullman, 1997)

HMOs Preference for the Prepaid, Monthly Premium:

HMOs prefer prepaid monthly premiums so as to allow members to receive services whenever needed with ease. The monthly contribution helps reduce deductibles as well as prevent the full footing of bills fi case of need for services. The amount paid by members is not dependent on the level of services one receives. The program however requires a determination by the primary practitioner or nurse on whether the patient needs a specialist or not. This is limited in practice.

Pay-for-Performance as a Superior Model:

This model of payment is criticized as being profit oriented. Professionals in the health sector argue that measurement of outcomes such as time spends with the patients and the surgical outcomes may be difficult. The programs introduced by the model however are aimed at improving the services offered by medical practitioners relative to the cost incurred by patients (Nix 2013).

Interview Questions and Answers

1. What kind of risk do the MCOs assess?

Risks which we assess are those that affects health systems and whose analysis brings to light some valuable light to healthcare organizations. They are based on the complexity of business environment and the business/strategic impact. They comprise the physician contracting, joint ventures, quality process improvement, meaningful use, ICD-10 Transition, accountable care organizations network, denials management, IT application post-implementation, 34OB drug discount program and the two-midnight rule.

2. Does risk-based compensation limit the freedom of primary care physicians in any way in terms of patient care? Why or why not?

Risk based compensation limit the freedom of primary physicians as because it presents avenues to exclude certain services from the contracts of MCO.

3. How does the capitation model of reimbursement work? Do physicians generally prefer one model over the other? Why or why not?

The model is a preventive health care plan where we give a direct payment to the primary care physician for those members enrolled in the program and have selected the physician as their provide. Physicians are believed to prefer a fee for service model of reimbursement because it reflects their autonomy as professionals in that sector.

4. Why do HMOs prefer the prepaid, monthly premium?

The advance monthly premium makes services available easily especially in clinic settings and encourages one to come in soon to prevent a minor condition from it escalating.

5. Is pay-for-performance a better model than existing models of compensation? Are there limitations to it as well?

I believe the pay for performance model is a better model for payment than the existing ones as the model can be viewed as a refinement of the fee for services and capitation reimbursement models. The model is limited in terms of outcome measurement as results such as clinical outcomes are difficult to measure.

Reference:

Baker, L. C. (1997). The effect of HMOs on fee-for-service health care expenditures: evidence from Medicare. Journal of health economics, 16(4), 453-481.

Frank, R. G., McGuire, T. G., & Newhouse, J. P. (1995). Risk contracts in managed mental health care. Health Affairs, 14(3), 50-64.

Hyatt, T. K., & Hopkins, B. R. (n.d.). Managed Care Organizations." The Law of Tax-Exempt Healthcare Organizations, 243-292. (4 ed.).

Kullman, S. (1997, august ). Capitation Is for Specialists, Not for Primary Care Physicians. Retrieved from Mangaged Care: http://www.managedcaremag.com/archives/1997/8/capitation-specialists-not-primary-care-physicians

Nix, K. (2013, November 20). What Obamacare’s Pay-For-Performance Programs Mean for Health Care Quality. Retrieved from Heritage Foundation: http://www.heritage.org/research/reports/2013/11/what-obamacares-pay-for-performance-programs-mean-for-health-care-quality.

Welker, R. (2015, April 15). Top 10 Risks facing todays healthcare industry. Retrieved from Modern Medicine Network: http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/top-10-risks-facing-todays-healthcare-industry-are-you-ready

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