Question

In: Finance

5. There are two kinds of third-party payers; private insurers or public insurers. Describe the two...

5. There are two kinds of third-party payers; private insurers or public insurers. Describe the two and give examples of each.

7. Understand the similarities and differences between different reimbursement methods, such as fee-for-service reimbursement and capitation.

8. Explain the difference between cash accounting and accrual accounting. How are the revenue recognition and matching principles related?

9. What is the difference between operating and net income?



Solutions

Expert Solution

5. Private insurers are privately run corporate insurance companies which, and public insurers are government-run insurance funds for the public. Differences are mostly in terms of premium design and customizable ability. While public insurers have a rigid structure, private insurance can be highly customized.

Example Obamacare is a public insurer, while United Health Insurance is a private insurer.

7. Difference: In Capitation, doctors are paid a fixed amount per member per month, while the Fee for service is based on the services provided to the patient.

Similarities are that both are widespread health service provider payment methods in the USA, and are often used as an insurance-based healthcare servicing upon requirement.

8. Cash accounting recognizes revenues & expenses only when cash changes hands, while accrual accounting recognizes revenue when it is earned and expenses when the billing is done.

The matching principle combines the accrual accounting with the revenue recognition principle

9. Operating Income, also called EBIT is the firm's earnings before interest payments on debts and income taxes. While Net Income is Operating Income post paying the Interest and taxes

Net Income = Operating Income - Interest on Debts- Taxes


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