Payment Methodologies Flashcards
Are incentives of the PT and the managers typically aligned?
No
What is “risk”?
Another party (insurer) taking on the financial risk on behalf of the customer
What is the purpose of insurance?
to protect the customer from financial ruin as a result of rare and expensive events
What is demand risk?
the number of people who seek out the service
With increases in demand (number of people that seek a service) the ____ an insurer will have to pay
more
What 3 things does volume/utilization risk take into account?
- Type of services are performed
- Quantity of services performed
- Length of time services are performed
Describe fee for service
It is the oldest method of reimbursement in which each service is separately billed for
What is the biggest problem with fee for service?
Everything is paid for, including mistakes. Therefore the more a provider does the more they get paid which oftentimes results in long length of stays
In a fee for service reimbursement plan all of the risk is on who?
The insurer, none is on the provider
Describe a discounted fee for service
This is a reimbursement plan very similar to basic fee for service however only a percentage of what is actually billed is paid by the insurer.
What are the providers incentives when proving a discounted fee for service?
They try to do more in order to make up for the discount so they schedule more visits and perform/charge more per visit.
In a discounted fee for service reimbursement plan all of the risk is on who?
Insurer still bears all demand and volume risk. Provider still bears almost none
What is a fee schedule?
A form of payment whereby the insurer pays on a per CPT code basis, but the amount paid is a pre-negotiated amount that is NOT based on charges.
So basically, no matter what you charge, you will only be paid what the fee schedule amount is.
What is a good example of a fee schedule?
The Medicare Physician Fee Schedule (MPFS)
What are the providers incentives when proving based upon a fee schedule?
They will charge for more of certain codes and less of others based on how much each is reimbursed for. Which results in no incentive for quality of care
In a fee schedule reimbursement plan all of the risk is on who?
the insurer, however the provider begins to bear some volume risk if the fee schedule amounts are low such they do not cover the per visit costs of providing care
When the reimbursement plan is to pay one dollar amount per day/visit what is it called?
Inpatient: per diem
Outpatient: per visit
How much are you paid per diem in a SNF?
$550
How much are you paid per visit in an OP clinic?
$90
Describe risks on the provider in a per day/visit reimbursement plan
Demand: not on provider
Volume: strongly on provider to provide services each visit/day
Describe a case rate payment plan
There is one dollar amount paid for the entire length of stay, regardless of how many procedures performed, length of stay, or how ill the patient is
What are the incentives for a case rate payment plan?
Results in very efficient care which in turn reduces the length of stay because if the length of stay is too long or unnecessary procedures are performed they will lose money
In a case rate payment plan the insurer bears ____ risk whereas the provider bears _____ risk
demand: they only pay when people seek treatment
volume: responsible for type, quantity, and duration of services
Describe a DRG (Diagnosis Related Group) Payment Plan
One dollar payment is paid for the entire length of stay
What is the difference between case rates and DRGs?
DRGs provide some sensitivity to patient acuity in that it allows for higher payment for more complex patients
In a DRG payment plan the insurer bears ____ risk whereas the provider bears _____ risk
demand
risk
Describe capitation
The payment of a fixed monthly fee per member to a health care provider.
What are the provider’s incentives for a capitation plan?
Focus is on prevention because they do not want to patients to come in a use services/money
Who bears the risk in
All services are included in the one set fee so that risk shifts from the insurer to the provider
What is the main difference in regards to profit between capitation and fee for service?
In a fee for service the higher the volume the higher the profit.
In a capitation plan the higher the volume the less the profit
What is the difference between “regular” capitation and global capitation?
“Regular” = monthly (PMPM)
Global = annually
What are the incentives with global capitation?
Goal is to prevent diseases/illness from occurring in health members
What does PCMH stand for?
Patient Centered Medical Home
What is PCMH?
A care delivery model whereby patient treatment is coordinated through their PCP to ensure they receive the necessary care when and where they need it, in a manner they can understand.
What payment methodology may be used in a PCMH?
global capitation
