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Question:

In what settings is UCR utilized? Do you think the patient should be informed by the type of reimbursement type ahead of time?

Notes from class

Overview of Reimbursement

This week, you will review the most common reimbursement methods used to compensate providers, including physicians, hospitals, outpatient, and ancillary facilities. The most common forms of payment are FFS and capitation. FFS is often criticized because it is assumed that with higher fees and higher volume, physicians make more money. FFS is often blamed for problems with controlling the overall cost of care and encouraging waste and fraud in the healthcare system.

FFS is considered a non-risk-based form of reimbursement because the payer (i.e. a Health maintenanace organization-HMO) is not sharing risk with the provider. FFS is most common among PPOs and traditional indemnity plans. Some examples of FFS include cost-based, charge-based, and prospective payment. Under cost-based reimbursement, the provider is reimbursed based on a predefined allowable costs. Payers pay billed charges to the provider under charge-based reimbursement. In a Prospective Payment System (PPS), payments are made based on categories: per procedure, per diagnosis, per diem, or by global pricing (Gapenski, 2003).

Capitation is a risk-based payment method most commonly used by HMOs, where a gatekeeper system is required. Capitation is most commonly used for primary care physicians in HMOs. Physicians are prepaid on a per-member-per-month (PMPM) basis. As long as the patient is a member of the physician's patient panel, the physician will receive payment, whether services were used or not. Capitation allows health plans to more effectively predict costs and is less costly to administer, because there are fewer claims to review (Gapenski, 2003).

Hospitals can only negotiate prices or contract with commercial or private insurers; Medicaid and Medicare set their own payments through the PPS, which is based on diagnosis-related groups (DRGs). A variety of methodologies may be used by the same payer. We will discuss these methodologies more under Hospital Reimbursement.

Per Diems and DRGs are used only for inpatient care. Thus, these methods cannot be applied to ancillary and ambulatory care patients. As care has shifted out of the hospitals to ambulatory facilities, the cost of care in these facilities has also increased. There are two classification groups related to reimbursements in these settings—ambulatory patient groups (APGs) and ambulatory payment classifications (APCs).

Question:

In what settings is UCR utilized? Do you think the patient should be informed by the type of

reimbursement type ahead of time?

Notes from class

Overview of Reimbursement

This week, you will review the most common reimbursement methods used to compensate providers, including

physicians, hospitals, outpatient, and ancillary facilities. The most common forms o

f payment are FFS and capitation.

FFS is often criticized because it is assumed that with higher fees and higher volume, physicians make more money. FFS

is often blamed for problems with controlling the overall cost of care and encouraging waste and fraud

in the healthcare

system.

FFS is considered a non

risk

based form of reimbursement because the payer (i.e. a Health maintenanace organization

HMO) is not sharing risk with the provider. FFS is most common among PPOs and traditional indemnity plans. Some

amples of FFS include cost

based, charge

based, and prospective payment. Under cost

based reimbursement, the

provider is reimbursed based on a predefined allowable costs. Payers pay billed charges to the provider under charge

based reimbursement. In a Pros

pective Payment System (PPS), payments are made based on categories: per procedure,

per diagnosis, per diem, or by global pricing (Gapenski, 2003).

Capitation is a risk

based payment method most commonly used by HMOs, where a

gatekeeper

system is required.

Capitation is most commonly used for primary care physicians in HMOs. Physicians are prepaid on a per

member

per

month (PMPM) basis. As long as the patient is a member of the physician's patient panel, the physician will receive

payment, whether services

were used or not. Capitation allows health plans to more effectively predict costs and is less

costly to administer, because there are fewer claims to review (Gapenski, 2003).

Hospitals can only negotiate prices or contract with commercial or private insur

ers; Medicaid and Medicare set their own

payments through the PPS, which is based on diagnosis

related groups (DRGs). A variety of methodologies may be used

by the same payer. We will discuss these methodologies more under

Hospital Reimbursement

Per Diems

and DRGs are used only for inpatient care. Thus, these methods cannot be applied to ancillary and ambulatory

care patients. As care has shifted out of the hospitals to ambulatory facilities, the cost of care in these facilities has al

increased. There a

re two classification groups related to reimbursements in these settings

—

ambulatory patient groups

(APGs) and ambulatory payment classifications (APCs).