Question

Clearly, things are beginning to change, especially with Georgia's Tom Price out as head of DHHS. Nonetheless, the midterm assignment for this course is to prepare a 5-page paper in APA-format which addresses one of the following topics integral to the US Affordable Care Act. You are allowed to use appropriate resources such as information from prior courses, briefs or white papers from the "think-tanks" listed at the bottom of the module section, peer-reviewed articles from journals such as Health Affairs, JAMA, NEJM, Lancet, etc. Be sure to check the Due Date...late assignments will not be accepted without a "one-letter grade per day" penalty.

Your paper should provide an introduction to the topic, 3-5 major issues related to each topic, conclusion, and any recommendations you might have to improve upon issues related to that particular topic. Remember to note any significant changes or discussions about significant changes (if any) to your topic since the current administration took office.

1. Payment Systems in Healthcare (Fee For Service, PPOs, Prospective Payment Systems, etc.)

Answer 1

The way that health purchasers pay health care providers to deliver services is a critical element of strategic purchasing. Each payment system is based on one or more provider payment methods or mechanisms.

Each method creates a different set of incentives and may be appropriate in different contexts.

Fee for service (FFS) is the most traditional payment model of healthcare. In this model, the healthcare providers and physicians are reimbursed on the basis of the number of services they provide or procedures they conduct. Payments in an FFS model are not bundled. This means that the insurance companies or the government agencies are billed for every test, procedure, and treatment rendered whenever a patient visits the doctor, has a consultation, or is hospitalized. This payment model rewards physicians for the volume and quantity of services provided, regardless of the outcome.

Prior to the value-based care initiative, the fee for service health plan was the customary type of health care insurance. Also identified as indemnity plans, the FFS coverage is most pricey; however a fee for service health plan provides complete independence and flexibility to those who can afford it. FFS allows the clients to freely choose their physicians and hospitals, with very little interference from the insurance provider. A fee for service health plan demands high out-of-pocket expenses as clients may be required to pay their medical fees up front and submit bills for reimbursement.

Medicare Fee for Service is a program, which offers a two-part insurance. This includes a hospital insurance along with a supplementary medical insurance for the eligible citizens. Generally, the hospital insurance offers a coverage for hospitalization, admission to hospice or a nursing facility, tests, surgical procedures and provision of health care at home. The supplementary part of Medicare fee for service program provides coverage for services offered by healthcare providers, including physicians, outpatient care, medical equipment, and certain preventive care.

A large number of experts have argued that the development in modern medicine, complications of current healthcare structure, and the healthcare requirements of a population with chronic illnesses have outdated the capability of fee for service in healthcare. Both industry experts and lawmakers believe that the medicinal evolutions have compromised the FFS model. The third-party payers have supported overutilization of FFS, and FFS has stimulated least financial responsibility on the part of both patients and providers.

Preferred Provider Organization (PPO)

A type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.

A preferred provider organization is a subscription-based medical care arrangement. A membership allows a substantial discount below the regularly charged rates of the designated professionals partnered with the organization. Preferred provider organizations themselves earn money by charging an access fee to the insurance company for the use of their network (unlike the usual insurance with premiums and corresponding payments paid either in full or partially by the insurance provider to the medical doctor). They negotiate with providers to set fee schedules, and handle disputes between insurers and providers. PPOs can also contract with one another to strengthen their position in certain geographic areas without forming new relationships directly with providers. This will be mutually beneficial in theory as the PPO will be billed at the reduced rate when its insureds utilize the services of the "preferred" provider, and the provider will see an increase in its business as almost all insureds in the organization will only use providers who are members. PPOs have gained popularity because, although they tend to have slightly higher premiums than HMOs and other more restrictive plans, they offer patients more flexibility overall.

Prospective Payment Systems

A Prospective Payment System (PPS) is a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service (for example, diagnosis-related groups for inpatient hospital services). CMS uses separate PPSs for reimbursement to acute inpatient hospitals, home health agencies, hospice, hospital outpatient, inpatient psychiatric facilities, inpatient rehabilitation facilities, long-term care hospitals, and skilled nursing facilities. See Related Links below for information about each specific PPS.

Prospective payment systems are intended to motivate providers to deliver patient care effectively, efficiently and without over utilization of services.The concept has its roots in the 1960s with the birth of health maintenance organizations (HMOs). The HMO receives a flat dollar amount (i.e., monthly premiums) and is responsible for providing whatever services are needed by the patient. Thus, there is a built-in incentive for providers to create management patterns that will allow diagnosis and treatment of the patient as efficiently as possible. In contrast, conventional fee-for-service payment systems may create an incentive to add unnecessary treatment sessions for which the need can be easily justified in the medical record.

There are only a few changes to make in the HMO model to describe the Medicare PPS systems for hospitals, skilled nursing facilities, and home health agencies. Instead of receiving a monthly premium to cover the whole family, the health care facility receives a single payment for a single Medicare beneficiary to cover a defined period of time or the entire inpatient stay. The payment amount is based on diagnoses and standardized functional assessments, but the payment concept is the same as in an HMO; the recipient of the payments is responsible for rendering whatever health care services are needed by the patient

Capitation Payment

Capitation is a type of a health care payment system in which a doctor or hospital is paid a fixed amount per patient for a prescribed period of time by an insurer or physician association.

It pays the doctor, known as the primary care physician (PCP), a set amount for each enrolled patient whether a patient seeks care or not. The PCP is usually contracted with a type of health maintenance organization (HMO)known as an independent practice association (IPA) whose role it is to recruit patients.

The amount of remuneration is based on the average expected health care utilization of each patient in the group, with higher utilization costs assigned to groups with greater expected medical needs.

The term capitation comes from the Latin word for caput, meaning head, and is used to describe the headcount within an HMO or similar group.

Per Diem and Per Visit Payments

An insurance payment made to the medical office for each day or visit is a per diem or per visit payment. Per diem payments are made based on a predetermined amount regardless of the amount of time spent by the physician providing treatment or the array of services that the patient may receive during the visit.

Hospital inpatient visits and skilled nursing facilities are some examples of events that may be eligible to receive per diem payments according to the contract an insurance ​payer has with the facility.

Per -visit payments are normally paid in a clinic, home health, physical therapy, or outpatient setting.

Per-Episode or Case Rate Payments

Per-episode payments are made for all services rendered during one episode of care. They are also referred to as case rates. The episode of care can extend over several days or visits and be covered by a single payment.

Episode payments are usually made for emergency room visits, ambulatory surgical procedures, or hospital inpatient visits. When used in hospital inpatient visits, the payment is usually made based on DRGs (Diagnosis Related Groups).

DRGs are assigned a classification based on a combination of ICD-9 diagnosis codes, CPT and HCPCS procedure codes, complications or conditions present on admission, discharge status, age, and sex. DRG payments are also based on a certain time period, which is an average number of days necessary for adequate treatment.

Financial Management and Accounts Receivable

Financial management is the effective and efficient management of the money generated by an organization which includes all components of the revenue cycle including accounts receivable.

Accounts receivables, also known as patient accounting, refers to revenues generated but not yet collected. To ensure cash flow is sufficient for effective management, the medical office has the responsibility to maximize its revenue potential.

A medical office may receive insurance payments by any or all of the different methods. Choosing which insurers to work with can determine what type of payments the office will receive.a