Categorize the broad approaches to health care reimbursement methodologies. - ANSWERA limited number of payment methodologies are used to reimburse providers. Payment methodologies fall into two broad classifications: fee-for-service and capitation. Under fee-for-service, of which many variations e...
CEBS GBA 2 - Module 1 (2023-2024)UPDATE
ANSWERED 100%
Categorize the broad approaches to health care reimbursement methodologies. - ANSWERA limited
number of payment methodologies are used to reimburse providers. Payment methodologies fall
into two broad classifications: fee-for-service and capitation. Under fee-for-service, of which many
variations exist, the greater the amount of services provided, the higher the amount of
reimbursement. Under capitation, a fixed payment is made to providers for each covered life, or
enrollee, independent of the amount of services provided.
Compare incentives occurring under a per diagnosis reimbursement system to those that occur
under a procedure prospective payment system. - ANSWERThe incentives under per diagnosis
reimbursement are similar to that under a procedure prospective payment system. Providers, usually
hospitals, will seek patients with diagnoses that have the greatest profit potential and discourage (or
even discontinue) those services that have the least potential. To the extent that providers have
some flexibility in selecting procedures (or assigning diagnoses) to patients, an incentive exists to
upcode procedures (or diagnoses) to ones that provide the greatest reimbursement.
Define indemnification. - ANSWERIndemnification of losses means reimbursement to the insured if a
loss occurs. In theory, indemnification restores the individual to their preexisting state had the loss
not occurred.
Define pooling of losses. - ANSWERThe pooling, or sharing, of losses is the basis of insurance. Pooling
means that losses are spread over a large group of individuals, so that each individual realizes the
average loss of the pool (plus administrative expenses) rather than the actual loss incurred. Pooling
involves the grouping of a large number of homogeneous exposure units—people or things having
the same risk characteristics—so that the law of large numbers applies.
The law of large numbers states that as the size of the sample increases, the sample mean gets ever
closer to the population mean. Accordingly, pooling implies: (1) the sharing of losses by the entire
group and (2) the prediction of future losses with some accuracy.
Define self-insurers. - ANSWERSelf-insurers make a conscious decision to bear the risks associated
with health care costs and then set aside (or have available) funds to pay future costs as they occur.
Individuals, except the very wealthy, are not good candidates for self-insurance because they face
too much uncertainty concerning health care expenses. Large groups, especially employers, are good
candidates for selfinsurance. Today, most large groups are self-insured.
, Define third-party payer. - ANSWERThis is a generic term for any outside party, typically an insurance
company or a government program, which pays for part or all of a patient's health care services.
Health insurers can be categorized into two broad groupings—private insurers and public programs.
Describe (a) the definition of a health insurance exchange (HIE) and its rationale, (b) the different
types of HIEs that were created and (c) how subsidies lessened costs of insurance procured through
these marketplaces. - ANSWER(a) Health insurance exchanges (HIEs) are online marketplaces where
people can research and review their options and purchase health insurance. To ensure price
transparency, all participating insurance companies are required to post on HIEs the rates for their
health insurance plans. Individuals can compare all plans and rates side by side and select plans that
are affordable and meet their needs.
(b) There are different types of HIEs. Public exchanges are created by state or federal governments
and are open to both individuals seeking personal insurance and small-group employers seeking
insurance for their workers. All plans listed on an HIE are required to offer core benefits. Private
exchanges are created by private-sector firms, such as health insurance companies.
(c) The ACA aimed to make insurance more affordable by offering subsidies to individuals below 400
percent of the federal poverty level that purchase insurance on HIEs. There are two types of
subsidies: (1) premium tax credits that offset the amount of monthly premiums that an individual
pays, and (2) cost-sharing subsidies that minimize the amount of out-of-pocket costs an individual
pays.
Describe how bargaining power is exercised by conventional insurers and the typical discount ranges
that occur as a result of these negotiations. - ANSWERMany conventional insurers have bargaining
power because of the large number of patients they bring to a provider, so they can negotiate
discounts from billed charges. Such discounts generally range from 20 to 50 percent, or even more,
of billed charges. The effect of these discounts is to create a system where there are listed rates (e.g.,
chargemaster prices for providers) that few payers actually pay.
Describe how bundled pricing serves to contain health care costs. - ANSWERUnder bundled pricing,
providers do not have the opportunity to be reimbursed for a series of separate services, which is
called unbundling. The rationale for unbundling is usually to provide more detailed records of
treatments rendered, but often the result is higher total charges for the parts than would be charged
for the entire package of services. Bundled pricing, when applied to multiple providers for a single
episode of care, forces involved providers to jointly offer the most cost-effective treatment. Such a
joint view of cost containment may be more effective than each provider separately attempting to
minimize its treatment costs because lowering costs in one phase of treatment could increase costs
in another.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller papersbyjol. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $14.99. You're not tied to anything after your purchase.
