Paying for Hospital and Physician Service: Reimbursement Methods

Paying for Hospital and Physician Service
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Paying for Hospital and Physician Service
Specific Reimbursement Methods used by Major Third-Party Payers
Across the United States, health services, partial and full reimbursement is considered by insurance carriers called the third-party payers. These payers are either private or publicly owned organizations rendering service to providers such as care professionals, nurses, pharmacists, and physicians. The primary private providers in the United States are Blue Cross and Blue Shield, while public providers include Medicare and Medicaid. Other organizations are made by merging small businesses, referred to as commercial insurers. In this context, the primary reimbursement methods are divided into two broader categories: capitation and fee-for-service (Medicare Payment Advisory Commission, 2018). Under fee for service methods, the sub-category systems include cost-based reimbursement, prospective payment system, and charge-based reimbursement.
The cost-based system is a system that focuses on the reported costs of healthcare services. The method is regarded as strong due to the opportunity and transparency offered to payers and consumers to carry out interhospital service comparisons. The charges-per-diagnosis are mostly fixed, allowing providers to access incentives such as reduced pay per stay and quality improvement services that are often cheap. On the other side, the major drawback of the method is the incurred incentives aimed at classifying patients as per diagnosis-related groups and higher cost-related hospital services. The charge-based system incurs payment of services offered by the hospital. The prepared chargemasters offered in this context show the charge list, and providers are supposed to pay for the agreed percentages. The percentages vary depending on the services offered and the items incorporated. Providers always pay minimum charges once they bring more patients for care service attention. The major challenge in using these types of systems is high-cost charges, especially following increased sphere of service competition (Reiter & Song, 2018).
Prospective reimbursement systems are used mainly by all third-party providers. Under this system, the rates are established before any payments are made. For example, most third-payers use the per-procedure system under the prospective reimbursement method. The method is commonly preferred for outpatient and challenging inpatient care due to heightened costs. Regarding quality improvement, the hospital incentives incur reduced service costs. The major challenge associated with this system is the sense of classifying patients and considering non-critical procedures. Per diagnosis system of reimbursement incur payment of services based on the patient's diagnosis. Using more resources in this method incurs higher established care service costs. For instance, this method embraces the diagnosis-related groups' approach, which is costly due to the reclassification of patients. In this line, hospitals offer various incentives focused on cost reduction, hence, lower reimbursement rates. The per diem reimbursement method is a type...