Inpatient prospective payment system is designed to

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Unformatted text preview: nce organizations (HMO’s), preferred provider organizations (PPO’s), and others Reimbursement Approaches- there are only a limited number of approaches to reimbursement o Fee- for- service (FFS): payment is tied to the amount of services provided Cost based (FFS): payer pays all allowable costs incurred in providing services. Typically, periodic interim payments are made Charge based (FFS): payer pays billed charges for services rendered to covered patients. Often a discount is negotiated for full charges which typically range from 20- 50% Prospective payments (FFS): have a fixed amount determined beforehand that is unrelated to either costs or charges • Prospective payments may be – per procedure, per diagnosis, per day, global pricing o Capitation: where payment is tied to the patient population (number of enrollees) Payment is not tied to utilization but rather to the number of lives covered, payments to providers usually is made on a per member per month basis Pay for Performance Plans- reimbursement methods that reward performance o Some P4P plans provide extra amounts to providers that meet performance goals, usually related to quality o Medicare’s approach is called value- based purchasing Medicare Hospital Payments o Inpatient Prospective Payment System is designed to – reduce Medicare outlays, provide cost- containment incentives, maintain quality of care Hospitals are paid a fixed amount per admission on the basis of diagnosis • If cost is less than reimbursement, hospital keeps the difference • If cost is more than reimbursement, hospital bears the loss IPPS payments are based on 334 diagnostic related groups (DRG’s) – each DRG is assigned a relative weight (the more complex and complications in the diagnosis, the higher the weight) o Outpatient Prospective Payment System consists of a fixed payment amount for each outpatient visit There are about 350 ambulatory payment classifications Medicare Physician Payments o Payments are made according to a Resource- Based Relative Value System with three components- Physician work, Practice (overhead) expenses, Malpractice insurance expense Provider Incentives (FFS) o Cost- based reimbursement: Maximize costs (quality) and service quantity. o Charge- based reimbursement: Maximize charges (price) and service quantity as well as minimize costs. • • • • • • • • o Per procedure...
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This document was uploaded on 03/12/2014 for the course HCM 4550 at University of Minnesota Duluth.

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