Reimbursement

Question 1

3 Traditional Ways of Physician Reimbursement

Answer 1

1. FFS
2. Capitation
3. Salary

Question 2

Fee-for-service

Answer 2

Reimbursement for each unit of medical service provided

Question 3

Capitation

Answer 3

Physician gets PMPM, from government / insurer

Question 4

Salary

Answer 4

Monthly lumpsum payment from insurer, hospital, or government

Question 5

FFS: Physician Pros

Answer 5

1. Reflects work done
2. Perceived as fair
3. Clinical freedom
4. Room to gain extra income

Question 6

FFS: Physician Cons

Answer 6

1. No secure income
2. Heavy admin work
3. Delayed / slow payment

Question 7

FFS: Patient Pros

Answer 7

1. Incentive to provide high quality care
2. No cream skimming
3. Physician choice

Question 8

FFS: Patient Cons

Answer 8

1. Copays
2. No incentive for preventative care
3. Access tied to your finance

Question 9

FFS: Insurer Pros

Answer 9

1. Physician productivity

2. No discrimination based on patient health

Question 10

FFS: Insurer Cons

Answer 10

1. Overtreatment

2. No cost containment

Question 11

Capitation: Physician Pros

Answer 11

1. Steady income stream
2. Low administrative cost
3. Rapid payments

Question 12

Capitation: Physician Cons

Answer 12

1. Does not reflect work done
2. Perceived as unfair
3. No clinical freedom / extra income

Question 13

Capitation: Patient Pros

Answer 13

1. Incentive to cost contain
2. Incentive for preventative care
3. No copays

Question 14

Capitation: Patient Cons

Answer 14

1. Incentive for cream skimming
2. Fixed reimbursement promotes short visits
3. No free physician choice

Question 15

Capitation: Insurer Pros

Answer 15

Cost containment

Same pros are patients

Question 16

Capitation: Insurer Cons

Answer 16

Undertreatment

Question 17

Salary: Physician Pros

Answer 17

1. Steady income stream
2. Low administrative cost
3. No disputes about pay

Question 18

Salary: Physician Cons

Answer 18

1. No extra income
2. Limited working hours
3. No clear measure of “fair”

Question 19

Salary: Patient Pros

Answer 19

1. Incentive to cost contain
2. Incentive for preventative care
3. No copays

Question 20

Salary: Patient Cons

Answer 20

1. No incentive for innovative / high-quality care

2. Potential for unproductive doctors

Question 21

Salary: Insurer Pros

Answer 21

1. Incentive to cost contain
2. Incentive for preventative care
3. No copays

Question 22

Salary: Insurer Cons

Answer 22

Unproductive physicians

Question 23

Indemnity Plan

Answer 23

Free choice of hospitals / physicians

No insurer employed hospitals / physicians

No subsidized treatment

Question 24

IDN

Answer 24

Integrated delivery network

Managed care organization

Integrate financing / insurance with delivery and payment

Question 25

Reasons Managed Care Fails

Answer 25

1. too many restrictions
2. increased bargaining power through hospital consolidation
3. MCOs use expensive tech

Question 26

Factors Leading to Lower Supply and Utilization

Answer 26

1. Reimbursement changes
2. Rural hospital closure
3. Impact of managed care

Question 27

Reimbursement changes

Answer 27

Retrospective reimbursement based on total costs

Question 28

Cost-plus reimbursement

Answer 28

Per diem, you make more for higher LOS (retrospective)

Rates are based on total cost (including capital costs)

Question 29

DRG (what)*

Answer 29

Diagnosis related group - 1982 introduced by CMS

Group similar clinical diagnosis in same clinical categories

Diagnosis and reimbursement based on case rate (prospective reimbursement)

Part of Tax Equity and Fiscal Responsibility Act

Question 30

DRG (why)*

Answer 30

DRGs standardize costs and give incentive to improve efficiency because payment depends on diagnosis, payment is independent of LOS

Question 31

DRG (how)*

Answer 31

Government determines average cost to treat Medicare patient in each of the 750 DRGs

DRG determined by principle diagnosis and up to 8 secondary, adjusted for geography

Question 32

ICD 10 Codes

Answer 32

Billing code that ID the diseases, international classification of diseases

Question 33

Consequences of DRG

Answer 33

1. Encourages cherry picking
2. Encourages upcoding, to get more severe diagnosis
3. Can encourage more intensive treatment

Question 34

Mitigating Negative DRG Incentives

Answer 34

1. Hospital Competition
2. Quality Improvement Initiatives
3. Internal Ethics Committees
4. External Peer Review
5. PAC services

Question 35

DRG reimbursement: Medicare

Answer 35

DRG reimbursement for acute inpatient

Question 36

DRG reimbursement: Medicaid

Answer 36

Some states do adjusted DRG based on Medicare, or per diem / FFS reimbursment

Question 37

DRG Incentivizes

Answer 37

1. Early discharge
2. Shift to alternative services
3. Efficiency / cost-containment

Question 38

DRG reimbursement: Commercial

Answer 38

Offers adjusted DRG amounts

Also offers per-diem / FFS rates that are below the charge master (discount)

Question 39

DRG reimbursement: Uninsured

Answer 39

Pay the highest prices (charge master rate)

Question 40

Cost-plus incentives

Answer 40

1. Increase LOS

2. No motivation to contain costs

Question 41

Reimbursement maximizing pop health

Answer 41

Reimbursement based on outcomes / cost effectiveness