2025 Hospital and Provider Reimbursement Assignment (2)hh

Assignment Information

• Due Date: March 16th @ 11:59PM

• Points: 60

• Submission: Through Blackboard

Physician Payment Methods

Definitions and Comparisons

1. Fee-for-Service

   • Definition: Physicians are paid for each service rendered.

   • Risk: Patients bear higher costs; providers may over-service.

2. Per Episode of Illness

   • Definition: Payment is made based on a defined episode of care.

   • Risk: Providers take on the risk for the entire treatment duration; potential for undertreatment.

3. Per Patient (Capitation)

   • Definition: Fixed amount paid per patient regardless of the number of services provided.

   • Risk: Physicians risk losing money if patient care is extensive; incentivizes efficiency.

4. Per Time (Salary)

   • Definition: Physicians receive a salary irrespective of services rendered.

   • Risk: Incentive may lead to lower productivity; higher hospital risk.

Hospital Payment Methods

Definitions and Comparisons

1. Per Procedure (Fee-for-Service)

   • Definition: Hospitals are paid for each procedure performed.

   • Risk: Encourages overtreatment; costs increase.

2. Per Day (Per Diem)

   • Definition: Hospitals are reimbursed a fixed amount per day patient spends.

   • Risk: Hospitals may prefer longer stays; patient outcomes may not be prioritized.

3. Per Episode of Hospitalization (DRGs)

   • Definition: Fixed payment based on diagnosis-related groups.

   • Risk: Risk for hospitals if care exceeds fixed payment; encourages efficient treatment.

4. Per Patient (Capitation)

   • Definition: Fixed payment per patient regardless of procedures.

   • Risk: Hospital may under-provide care; patient care efficiency is crucial.

5. Per Institution (Global Budget)

   • Definition: Institutions are given a budget for all services provided.

   • Risk: Financial risk if expenditures exceed budget; incentivizes cost management.

Hospital Scenario Analysis

Impact on Hospital Financials

• Patients Paying Out of Pocket (Fee-for-Service)

  • Admit more patients: HELPS

  • Keep patients longer: HELPS

  • Order more diagnostic tests: HELPS

• Medicare Patients (DRG payment)

  • Admit more patients: HURTS

  • Keep patients longer: HURTS

  • Order more diagnostic tests: HURTS

• Medicaid Patients (Per Diem)

  • Admit more patients: HURTS

  • Keep patients longer: HELPS

  • Order more diagnostic tests: HELPS

• Patients with BCBS (Per Diem)

  • Admit more patients: HURTS

  • Keep patients longer: HELPS

  • Order more diagnostic tests: HELPS

• Patients with Aetna (Capitated)

  • Admit more patients: HURTS

  • Keep patients longer: HURTS

  • Order more diagnostic tests: HURTS

Physician Contract Willingness

• Physicians may be willing to contract for a lower negotiated rate for several reasons:

  • Participation in larger networks can lead to more patients.

  • Steady income stream might mitigate financial unpredictability.

  • Building relationships and trust with insurance companies could facilitate better patient referrals.

  • Establishing a patient base through lower rates can enhance long-term viability.