Question 1
The three types of reimbursement methods are traditional methods, prospective payment systems (PPS), and Fixed Payment. In particular, the traditional method is a payment method based on the submitted charges (Corro & Robertson, 2011). On the other hand, the fixed method of payment based on fixed payments made monthly. Moreover, the PPS reimbursement method composes of three methods of payment: Diagnosis Related Group (DRG), Ambulatory Classification of payment (APC) and a value scale related to resource based (RBRVS).
Question 2
The advantages of the traditional payment method include first the approach of payment gives researchers of healthcare information on how the patient was treated which when properly analyzed can help in establishing the measures of performance. Secondly, for the case of a fee schedule, patient, or the payer have control over the payments and the final amount to be paid easily predictable without making errors. However, some of the disadvantages of these methods include the amount charged can encourage a situation of over provision of the medical services. Secondly, in the case of fee schedule method, it creates a chance of marginalizing activities not coded yet paid for. In addition, the traditional methods do not provide information on whether the service was provided in an appropriate way.
On the other hand, the advantages of fixed methods of payment include placing of a risk of performance on clinician to prevent the provision of unnecessary medical services, allows flexibility in making medical services individual to meet the person need of the patient and the payers can predict the final payment charge. The major disadvantage of this method is that it creates a chance of shortchanging the patients especially on cases of prevention care.As a result, it creates a chance for clinicians to admit many patients above their capacity since more patients reflect more payments.
The advantages of PPS include standardization of the administrative facilities and enabling software development to facilitate billing enables the creation of constraints for revenue management in hospitals hence preventing customer exploitation. On the other hand, the disadvantages of PPS are that it has no incentive to help hospitals prevent unnecessary extra inpatient days given to the sick person, some of the methods such as per diem do not have data transparency controls and monitoring the cost of medical services may require a third party hence creating administrative complexities.
Question 3
Capitation is a type of reimbursement where a person pays a fixed amount per month. This is a type of fixed method of payment suitable for employees of companies with medical insurances covers offered by their employer such as Government employees under a program called managed medical care plan (Kongstvedt, 2012). Free-for-service is a reimbursement method where the patient pays a hospital or any payer of third party form for the service provided. Additionally, this is a traditional payment method suitable for patients under commercial payers such as Aetna, Blueshield or BlueCross, and Humana.
Question 4
Usual, customary, reasonable (UCR) is a method of reimbursement that uses usual fee and customary fee to establish a fee, called reasonable. In particular, the usual fee is normally a fee submitted by a provider for given item or a service; customary fee is normally an amount charged by a provider of the same specialty within the same area geographically while a reasonable fee is an amount normally considered to be reasonable. Currently, managed medical care uses the reasonable fee as the recognized amount contributed by the health plan for a given medical procedure. Moreover, this reasonable amount is normally a charged amount for a given area hence varies from place to place.
Question 5
In the Financial year 1998, the office of the general inspector in the United States of America reported that the department of health reported an overpay of $12.6 billion on Free-for-service spending. As a result, this overspending was due to many cases of upcoding, churning, and unbundling witnessed in healthcare facilities. These cases of churning, upcoding, and unbundling are possible to overcome with modern ways of reimbursement such as PPT in government hospitals.
Question 6
The negative result of pay-for-performance (P4P) program is that some employees who are under P4P initially work very hard to meet the set performance target but immediately they get the bonus, they stop working hard and therefore may lead to failure of the organizations (Eijkenaar, Emmert, Scheppach, & Schöffski, 2013). The P4P is a very popular program in the market because many organizations normally carry out an annual appraisal for performance to be able to evaluate the performance standards of their employees.
References
Corro, D., & Robertson, J. (2011). The Impact on Physician Reimbursement of Changes to Workers Compensation Medical Fee Schedules. NCCI, March.
Eijkenaar, F., Emmert, M., Scheppach, M., & Schöffski, O. (2013). Effects of pay for performance in health care: a systematic review of systematic reviews. Health policy, 110(2), 115-130.
Kongstvedt, P. R. (2012). Essentials of managed health care. Jones & Bartlett Publishers.
