Payment Methodologies

Question 1

Are incentives of the PT and the managers typically aligned?

Answer 1

No

Question 2

What is “risk”?

Answer 2

Another party (insurer) taking on the financial risk on behalf of the customer

Question 3

What is the purpose of insurance?

Answer 3

to protect the customer from financial ruin as a result of rare and expensive events

Question 4

What is demand risk?

Answer 4

the number of people who seek out the service

Question 5

With increases in demand (number of people that seek a service) the ____ an insurer will have to pay

Answer 5

more

Question 6

What 3 things does volume/utilization risk take into account?

Answer 6

• Type of services are performed
• Quantity of services performed
• Length of time services are performed

Question 7

Describe fee for service

Answer 7

It is the oldest method of reimbursement in which each service is separately billed for

Question 8

What is the biggest problem with fee for service?

Answer 8

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

Question 9

In a fee for service reimbursement plan all of the risk is on who?

Answer 9

The insurer, none is on the provider

Question 10

Describe a discounted fee for service

Answer 10

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.

Question 11

What are the providers incentives when proving a discounted fee for service?

Answer 11

They try to do more in order to make up for the discount so they schedule more visits and perform/charge more per visit.

Question 12

In a discounted fee for service reimbursement plan all of the risk is on who?

Answer 12

Insurer still bears all demand and volume risk. Provider still bears almost none

Question 13

What is a fee schedule?

Answer 13

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.

Question 14

What is a good example of a fee schedule?

Answer 14

The Medicare Physician Fee Schedule (MPFS)

Question 15

What are the providers incentives when proving based upon a fee schedule?

Answer 15

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

Question 16

In a fee schedule reimbursement plan all of the risk is on who?

Answer 16

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

Question 17

When the reimbursement plan is to pay one dollar amount per day/visit what is it called?

Answer 17

Inpatient: per diem

Outpatient: per visit

Question 18

How much are you paid per diem in a SNF?

Answer 18

$550

Question 19

How much are you paid per visit in an OP clinic?

Answer 19

$90

Question 20

Describe risks on the provider in a per day/visit reimbursement plan

Answer 20

Demand: not on provider

Volume: strongly on provider to provide services each visit/day

Question 21

Describe a case rate payment plan

Answer 21

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

Question 22

What are the incentives for a case rate payment plan?

Answer 22

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

Question 23

In a case rate payment plan the insurer bears ____ risk whereas the provider bears _____ risk

Answer 23

demand: they only pay when people seek treatment
volume: responsible for type, quantity, and duration of services

Question 24

Describe a DRG (Diagnosis Related Group) Payment Plan

Answer 24

One dollar payment is paid for the entire length of stay

Question 25

What is the difference between case rates and DRGs?

Answer 25

DRGs provide some sensitivity to patient acuity in that it allows for higher payment for more complex patients

Question 26

In a DRG payment plan the insurer bears ____ risk whereas the provider bears _____ risk

Answer 26

demand

risk

Question 27

Describe capitation

Answer 27

The payment of a fixed monthly fee per member to a health care provider.

Question 28

What are the provider’s incentives for a capitation plan?

Answer 28

Focus is on prevention because they do not want to patients to come in a use services/money

Question 29

Who bears the risk in

Answer 29

All services are included in the one set fee so that risk shifts from the insurer to the provider

Question 30

What is the main difference in regards to profit between capitation and fee for service?

Answer 30

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

Question 31

What is the difference between “regular” capitation and global capitation?

Answer 31

“Regular” = monthly (PMPM)

Global = annually

Question 32

What are the incentives with global capitation?

Answer 32

Goal is to prevent diseases/illness from occurring in health members

Question 33

What does PCMH stand for?

Answer 33

Patient Centered Medical Home

Question 34

What is PCMH?

Answer 34

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.

Question 35

What payment methodology may be used in a PCMH?

Answer 35

global capitation