Revenue Determination By Kazi Moonmoon HCMG 750 January 19, 2014 Chapter 6 describes revenue determination. Write a 3-4 page paper to include: List and discuss the three payment-determination bases. Explain the difference between a “specific services” payment unit compared to a “bundled services” payment unit. Describe the three major ways that health care providers can control their revenue function. I expect at least 5 secondary sources properly cited and referenced for this paper. Cost-payment Payment basis is known as the methods used by the one making payments for services provided by hospitals or doctors. There are three payment determination bases. First, cost-payment basis is a method for determining fees for medical services, …show more content…
Price-related payment determination is based on a system where healthcare provider is reimbursed for services based on a some form of a connection to the total charges of the service provided. For example, there might be a mutual agreement between the healthcare provider and the payer that of the total charges, only 65% will be billed. Therefore, if the total charges come to be $5,000, then the provider will bill $3250. There are certain instances where price-related payment basis is used. For example, price-related payment basis is used for self-pay patients, managed care plans with outpatient percentage of charged payment provision, indemnity payers, and Medicare outpatient areas …show more content…
The first type is the bundled service payment. Bundled service payment, which is also known as episode-based payment, is the payment method when different services that are related are accumulated and billed under one event of care. For example, a patient who undergoes a Lasik eye surgery will be billed for the surgery itself along with any pre-op and post-op office visits and any medication prescribed. Bundling multiple services allows the healthcare provider to provide quality care at a low cost ("Bundled payment," ). In 2011, CMS initiated the Bundled Payments for Care Improvement Initiative, which employs four methods of bundled payments. First method is based on a prospective payment while the other three is based on a retrospective payment. First method is for inpatient stay only, second method is for inpatient stay along with postdischarge services, third method is for posdischarge service only, and fourth method is also for inpatient stay (Cimasi, 2013). Specific-Service Payment Specific-service payment is a system where all the services that were provided are not combined and billed separately. Usually, outpatient services and private clinic will utilize this system when billing for services they provided. For example, laboratory tests, radiological tests, and medications will all be billed separately. Furthermore, specific-service payment method will also be utilized when billing high-cost medications,
Conversely the OPPS (outpatient prospective payment system) is controlled for different service groups such as the APCs (ambulatory payment classifications). The outpatient services in the various APCs are the same in terms of the required resources and clinical aspects. The payment rate for APC for each group is adjusted to justify the geographic differences and is applied to all of the services in this group. The health care institutions adopt a fixed amount for all the outpatient service based on the classifications of the ambulatory services. Marcinko (2006) notes that Medicare uses it to reimburse the health care providers for the items and serves which are not part of the prospective payment systems. A MPFS (Medicare physician fee schedule) determines the rate of payments for therapy and physician services based on conversion factors, relative value units, as well as, the indices costs.
On the basis of the clinic’s previous collections experience, Dough was able to convert billings for medical services into actual cash collections. On average, about 20% of the clinic’s patients pay immediately for services rendered. Third-party payers pay the remaining claims, with 20% of the payments made within 30 days and the 60% remainder (of total billings) paid within 60 days. For monthly budgeting purposes, 20% are assumed to be collected one month after the billing month, and 60% are assumed to be collected two months after the billing month.
The purpose of financial measurement in healthcare is to provide the community with the services it needs, at a clinically acceptable level of quality, at a publicly responsive level of amenity, at the least possible cost. This is done by providing healthcare finance managers with accounting and finance information to help accomplish the purpose of the organization (Nowicki, 2015). When making accounting decisions about budgeting and inventory control, an understanding of economics, statistics, and operations research is needed. Major Financial Measures
The current focus on new healthcare models is a reaction to long-standing concerns around quality, cost, and efficiency. Accountable Care Organizations model focus on integrated healthcare to promote accountability and improve outcomes for the health of a defined population. The goal of integrated healthcare is to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors (CMS, 2014). The following paper will analyze an ACO’s ability to change healthcare in the United States.
Niles, Nancy J. Basics of the U.S. Health Care System. Sudbury, MA: Jones and Bartlett, 2011. Print.
McFarlan, F. Warren. CareGroup. Ed. Robert D. Austin. N.p.: Harvard Business School, 2005. 1-22. Print.
Niles, N. J. (2011). Basics of the U.S. health care system. Sudbury, MA: Jones and Bartlett.
Each procedure performed by a doctor or other health care provider has a code attached to it that allows them to bill the insurance payer, whether private, Medicare, or Medicaid. That code is called a CPT code, which stands for Current Procedural Terminology. When a provider send a CPT code to an insurance payer, that CPT code determines how much he or she will be paid. Different codes correspond to different procedures or services and can have higher or lower costs. As long as the provider uses the correct code, then the provider is paid based on the services and procedures performed. When a provider upcodes,
All payments can’t be the same due to payment adjustments that has different costs in which this will creates different reimbursements that are rendered. These services that are provided in a hospital setting can become more expensive than an outpatient services and prices can be different.
Stephen Jonas, Raymond G, Karen G, “An Introduction to the US healthcare System” 6th Edition, Page 118, 25 May 2007
Pardis, M., Wood, J., & Cramer, M. (2009, September-October). A policy analysis of health care . Nursing economic$ the journal for health care leaders, 27(no 5 2009 r). Retrieved from http://www.nursingeconomics.net/cgi-bin/WebObjects?NECJournal.woa/wa/viewSection?s_id=1073744460.
The balance between quality patient care and medical necessity is a top priority and the main concern of many of the healthcare organizations today. Due to the rising cost of healthcare, there has been a change in the focus of reimbursement strategies that are affecting the delivery of patient care. This shift from a fee-for-service towards a value-based system creates a challenge that has shifted many providers’ focus more directly on their revenue. As a result, organizations are forced to take a hard look at the cost of services they are providing patients and then determining if the services and level of care are appropriate for the prescribed patient care.
Hospitals recognized the need for the case management model in the mid 1980’s to manage the lengths of stay of hospitalized patients and the treatment plans (Jacob & Cherry, 2007). In 1983, the Medicare prospective payment program was implemented which allowed hospitals to be reimbursed a set payment based on the patient’s diagnosis, or Diagnosis Related Groups (DRG), regardless of what treatment was provided or how long the patient was hospitalized (Jacob & Cherry, 2007). To keep the costs below the diagnosis related payment, hospitals ...
The Six stages of the revenue cycle are provision of service, documentation of service, establishing charges, preparing claim/bill, submitting claim, and receiving payment. The first step consist of providing the ...
reimbursement determinations. As a result, the camaraderie among physicians has developed into a more aggressive approach to impede competition (Shi & Singh, 2012). Little information is shared with patients in regards to procedures or disease control. The subjects are forced to rely on the internet for enlightenment on the scope of their illnesses (Shi & Singh, 2012). Furthermore, the U.S. health care system fails to provide adequate knowledge on billing strategies for operations and other medical practices. The cost in a free system is based on supply and demand and is known in advance of hospital admission (Shi & Singh, 2012). The need for new technology is another characteristic that is of interest when considering the health care system. Technology is often v...