1. List and discuss the three payment-determination bases.
a. Cost-payment basis: Essentially indicates that the providers cost will be the
underlying mechanism for payment, with the methods for determining cost
established in the payer-provider contract. Outside of Medicare payment for
critical hospital access, cost- arrangements are uncommon.
b. Fee-schedule basis: Is a set payment plan that is commonly included in the
contract. The real payment will be fixed and unconnected to the providers cost
or actual rate on a fee schedule basis. Fee schedules are usually arranged with
the payer ahead prior to or approved as a condition of participation in
programs like Medicare and Medicaid.
c. Price-related-payment basis: This payment is depended on a percentage of
the overall charges, which is common in this case. A price related payment
basis suggests the provider will be compensated in some way that relates to its
overall charges or service pricing.
2. Explain the difference between a specific services payment unit compared to a bundled
services payment unit.
a. Certain service payment is a method where the individual services provided to
patients in an encounter of care not agitated.
b. Bundle service which is also referred to episode-based payments aggregates
services provided to a patient in an encounter of care into one payment unit in
the case of bundle service the payer would collectively reimburse the
providers involved, using a set price for the episode of care that has been
taken to take care of the patient.
3. What are the three major ways that health care providers can control their revenue
function?
a. Price Setting
b. Payer Contract Negotiation
c. Billing/Coding management
4.What are the three factors that influence pricing?
d. Desired net income
e. Competitive position
f. Market structure
5. Why does market share matter to a health care provider?
a. Market share is important because greater market shares leads to greater
leverage when negotiating health contracts.
6. What contract provision will best protect a hospital being paid on a DRG basis for
a. A rate increase limit will best protect a hospital being paid on a DRG basis for
inpatient services.
7. Why should providers seek whenever possible to minimize health plan rate
differentials?
a. To protect the plans with smaller discounts from being forced out of the market,
providers seek to minimize health plan rate differential.
8. What can a health care provider vary across different payers?
a. Discounts may vary across different payers because healthcare providers must set
rates at levels sufficient to maintain their financial capability.
9. What is the best way to compare hospital costs?
a. By assessing the cost of both inpatient and outpatient services
10. What measure(s) is used directly as one of the means of determining the reasonableness
of a hospital’s charges?
a. The ROI method return on investment =net revenue-cost/investment
11. What are the four major activities of a health plan?
a. The four major activities include underwriting of risks, utilization review, claims
administration, and marketing.
12. Explain coordination of benefits.
a. Coordination of benefits is the process of determining who is responsible for
payment when there is more than one insurer involved.
13. What does a high deductible health plan with a savings option include?
a. This plan includes the use of pretax dollars to pay for certain health care expenses
complete of deductibles and copayments.
14. What is a withhold feature for payment to health care providers?
a. A withhold feature is a mechanism set in place for reducing the risk to the IDS or
health plan.
15. What promotes the growth of Integrated Delivery Systems?
a. This eliminates the health plan known as the middleman and places the hospitals
and physicians closer to the premium dollar.
16. Why are capitation plans more common for physician payments?
a. This is more common because it allows for more utilization control, meaning this
will encourage preventive care and reduce unnecessary services.
17. The James Clinic is an organization of 100 physicians in a variety of specialties. They
recently contracted with Prudential Health Plan on a capitated basis to provide all medical
services to Prudential's members for the next three years. What would this HMO
model be defined as? James Clinic can be defined as a group model hmo. This model
involves contracts with organized physician partnerships, professional corporation or other
associations. While physicians treat in their own offices they are compensated BY HMO.
18. What provision would a medical group include in its contract with an HMO to receive
larger PMPM payments if the HMO members are chronically ill? the goal of including
these provisions in the contract is to guarantee that the medical group is sufficiently compensated
for the additional resources and efforts required to manage and provide quality care for
chronically ill HMO members. At the same time, it incentivizes the medical group to
concentration on improving outcomes and managing chronic conditions efficiently to maintain or
increase their PMPM payments.
19. You are trying to establish a PMPM rate for Primary Care Physicians. Actuarial
estimates project 2,500 visits per 1,000 members per year. You have contracted with a Primary
Care Medical group at $45.00 per visit with a $5.00 copayment that you will receive.
What PMPM rate should you set? the PMPM rate should be set at approximately $8.33 per
member per month to cover the cost of Primary Care Physician visits at $45.00 per visit with a
$5.00 copayment.
20. An HMO has a Point of Service (POS) option for its members but will pay only 80% of
approved charges. If a member goes out of network for a medical procedure with a
charge of $2,000, of which $1,200 is approved, how much must the member pay?
$800
21. A hospital has contracted with an HMO to provide acute care inpatient services for
$1,000 per day, subject to a 10% withhold. The proposed budget for inpatient services is
based upon expected utilization of 600 days per 1,000 members at $1,000 per day, or
$600,000 per 1,000 members. The hospital risk pool will be split equally between the
$ 502,500
hospital and a primary care physician group. If only 450 days per 1,000 members were
utilized in the first year, how much would the hospital be paid per 1,000 members?
22. A nursing home contracts with an HMO for skilled nursing care at $2.00 PMPM. If costs
are expected to average $120 per day, what is the maximum utilization of days per 1,000
members that the nursing home can experience before it begins to lose money
