Reimbursement of Claims
2. Elements of Reimbursement
3. Reimbursement in Saudi Arabia
4. Evaluating Types of Reimbursement
5. Compare and contrast Types of Reimbursement
6. Impact of reimbursement on healthcare facilities
7. Trends in Healthcare Reimbursement
The following information can be used
1- Introduction (minimum 100 words) Definition of reimbursement
Reimbursement is another term for payment. A provider or facility submits a claim. Then the health insurance company or third-party administrator pays the provider or facility for their claim based on their contract. It sounds simple, but the payment arrangements in healthcare can be complex. As providers do not generally receive full payment for services upon a patient’s receipt of services under a health insurance scheme, reimbursement becomes essential to a provider’s livelihood.
2- Elements of Reimbursement (minimum 100 words)
· Coverage refers to a set of rules that explain when a payer will or will not pay for a product or service. Coverage can vary by payer and depends on what each payer considers to be medically necessary. In general, payers want to see regulatory approval, strong clinical evidence demonstrating the treatment is at least as beneficial as the established alternative, and a demonstration of the treatment’s cost-effectiveness. Payers expect well-designed clinical trials with results published in peer-reviewed journals. Support from the physician community and professional societies are also increasingly important to adoption and coverage of new technology.
· Coding refers to the sets of alphanumeric codes that are the language of billing. Providers use codes to tell a payer what products or services were provided and why. There are three main sets of codes: CPT, HCPCS, and ICD-10-CM. Choosing the right code to accurately describe a product or service while maximizing payment requires a detailed understanding of the coding structures. If no code exists, it is important to understand the approval process for acquiring a new one – whether it be a CPT code used by physicians to describe what is done to a patient, or an HCPCS code which describe products not described by CPT codes. Finally, it is important to understand that choosing the wrong code creates not only financial implications but also legal culpability.
· Payment is driven by the coding systems and is probably the most complicated element of reimbursement. Although coding drives payment, reimbursement is not quite as simple as just submitting an active code. Payment is driven by complex payment methodologies that differ depending on the site of care where delivery is provided. For example, payment for the same procedure in an Ambulatory Surgery Center (ASC) is often less than payment for the same procedure performed in a hospital outpatient facility.
3- Reimbursement in Saudi Arabia (minimum 100 words)
While the majority of healthcare is paid for by the government, reimbursement of medical services by providers can be seen in the private sector of Saudi Arabia. Now is therefore the best time to intervene and bring in regulation and standardization. The two main vehicles for carrying out reimbursement-related inventions are the aforementioned Central Board for the Accreditation of Health Institutions CBAHI and Council of Cooperative Health Insurance CCHI. The avenues for intervention are many. One avenue is to introduce regulation in chargemasters, building on the drug regulation mechanisms already in place. Another avenue is to standardize the electronic transfer protocol involving providers, insurers, and banks. Other avenues include introducing bundled payments, linking payment to quality, and using DRG-related payments.
Pharmaceuticals and Medical Devices
Even in countries where all healthcare services are covered free of charge, like the United Kingdom and Saudi Arabia, not all items like pharmaceuticals and medical devices receive the same treatment. It should be noted that there is reimbursement to some extent for pharmaceuticals in Saudi Arabia; however, it varies between sectors. For example, drugs covered under the Ministry of Health might not be covered under the Kingdom of Saudi Arabia Ministry of National Guard-Health Affairs. The same is true for private health insurance. Medication pricing is regulated by the Saudi Food & Drug Authority, but a pricing list by the SFDA does not ensure your medication will be reimbursed. In the event your insurance does not cover your medication, you have the option to pay out-of-pocket (Al-Saggabi, 2017).
4- Evaluating Types of Reimbursement
1# fee-for-service (minimum 100 words)
Fee-for service (FFS) is healthcare’s most traditional payment model where physicians and healthcare providers are reimbursed by insurance companies and government agencies (third-party payers) based on the number of services they provide, or the number of procedures they order. Payments are unbundled and paid for separately, so every time patients have a doctor’s appointment, a surgical consultation, or a hospital stay, these third-party payers are billed for each visit, test, procedure, and treatment provided, even though some of these may not be needed, or supported by evidence-based data. Three Types of Fee-For-Service Reimbursement
a) Cost-based Reimbursement (minimum 100 words)
Under this fee-for-service type of reimbursement, the payer agrees to pay the provider for the costs of providing medical services to its insureds. This is limited to allowable costs directly related to healthcare services. Under this method, administrative costs would not be included in the reimbursement (Gapenski & Reiter, 2015).
b) Charge-based Reimbursement (minimum 100 words)
This occurs based on a pre-established rate schedule between the provider and insurer, called a chargemaster or fee schedule. This is a negotiated, predetermined amount usually lower than a provider’s general charge (Gapenski & Reiter, 2015). The positive for this type of payment system is that insurers can better predict costs and encourage patient access to care; however, it can lead to overuse of services and fragmentation of care.
c) Prospective Payments (minimum 100 words)
Under this fee-for-service reimbursement, rates are established by the insurer before services are rendered but are not directly related to costs or fee schedules. These rates can be based solely on the procedure or diagnosis. Thus, more complicated procedures will be costlier. Payments can also be based on a per diem, meaning a facility will be reimbursed a predetermined daily amount for a hospital stay. Bundled rates are a combined payment for an episode of treatment. For example, in a bundled payment scenario, a patient having baby payments for prenatal and postnatal care would pay a single payment for these services (Gapenski & Reiter, 2015). Schedules can have the effect of encouraging providers to issue more services than necessary but gives payers more. A common method in prospective payments includes diagnosis related groups (DRGs). Instead of paying for the actual costs of the medical procedure, the payer expends the amount associated with the DRG. If the hospital expends less than the DRG, then it will make a profit.
2# Capitation (minimum 100 words)
This is a different type of payment method that relates only to a covered life, regardless of the services performed. Thus, if patient A received the check-up, skin swab, and MRI, only a set amount would be paid, not each service provided. This payment system generally requires a patient to see a primary care physician before seeing a specialist. The goal of this of payment is to incentivize providers to limit unnecessary services.
3# Value-based purchasing (minimum 100 words)
Value-based care is a philosophy of healthcare realized when clinicians intentionally consider the quality of care provided, and the overall outcomes of that care, in relation to cost-efficiency. In the value-based care model doctors and specialists consider “best practices” when treating patients, since they are reimbursed for the quality and efficiency of care they provide. Value-based care models encourage a “holistic,” team approach to care, requiring coordination and communication between physicians across specialties. When successful, physician entity groups receive incentive payments for providing better care for individuals at a lower cost. Quality and efficiency are the goal of every value-based payment model.
(minimum 100 words) There are four conceptual “templates” for value-based care, and each consists of multiple models specific to specialty, episode, and patient population:
· Pay-for-Coordination: a primary care physician leads and coordinates care between multiple providers and specialists to manage a unified care plan for patients and to ensure efficiency and quality; e.g., the Patient-centered Medical Homes (PCMH) model.
· Pay-for-Performance (P4P): healthcare providers are incentivized to meet certain quality and efficiency benchmark measures. Physician reimbursements are directly related to achieving these performance measures; e.g., the Hospital Readmission Reduction (HRR) program and the Skilled Nursing Facility Value-based Program (SNFVBP)
· Bundled Payment or Episode-of-Care Payment: this model encourages quality and efficiency because healthcare providers are reimbursed with a set amount of money to pay for a specific episode of care, such as a hip replacement, and any complications. Providers keep any realized net savings; e.g., the newly launched Bundled Payments for Care Improvement—Advanced (BPCI–Advanced) model and the Comprehensive Care for Joint Replacement (CJR) model.
· Shared Savings Programs (Upside and Downside): physicians form entity groups and provide population health management. Quality and efficiency are achieved through coordinated, team care and any realized net savings are given back to the provider: e.g., Accountable Care Organizations (ACOs).
4# Diagnosis-related group based payment (minimum 100 words)
5- Compare and contrast the advantages and disadvantages of:
a. fee-for-service (minimum 100 words)
b. Capitation (minimum 100 words)
A disadvantage of this system is that preventative care might not see the attention deserved due to the focus on the medical problem being presented and could foster chronic conditions. In addition, because this reimbursement is based on the number of patients seen, a provider could accept more patients than they would generally see to increase revenue, thus seeing patients for shorter amount of times and potentially sacrificing quality (Berenson, Upadhyay, Delbanco, & Murray, 2016).
c. Value-based purchasing (minimum 100 words)
6- Describe what reimbursement method produces the best quality care (minimum 100 words)
In the traditional healthcare model, many times patients are left confused and frustrated trying to navigate through the healthcare system alone. For example, patients must manage their own care path, moving from primary care physician, to specialist, and then to surgery center in a way that is often complicated and unpredictable. In addition, patients may see multiple doctors, specialists, and surgeons who do not communicate with each other, or do not have access to the same important, patient data. In the traditional fee-for-service model, providers lack the technology and the incentives to coordinate patient care across the healthcare continuum. Physicians work independently, remaining “siloed” in the fee-for-service environment of rising healthcare costs.
The value-based model of healthcare shifts the emphasis of care from simply reimbursing clinicians on tests and services ordered to rewarding physicians for providing appropriate, coordinated care that keeps patient populations healthy. Value-based care programs are designed to drive down healthcare costs and to improve patient care and population health, by financially rewarding healthcare providers for considering overall patient care, cost- efficiency, and patient outcomes. In the new value-based care setting, healthcare professionals are encouraged to engage with patients, to provide care appropriate to each individual’s circumstances, to invest in new technology, to evaluate processes, performance, and data, and to align their efforts with multiple providers, taking a team approach to healthcare. This shift in healthcare strategy is extremely beneficial to the patient population, because it delivers a connected care experience where patients receive more cost-efficient, coordinated, appropriate, and effective care, improving the health of individuals and their communities.
In spite of the inevitable shift from fee-for-service reimbursement to value-based care reimbursement, Paul Ginsberg, PhD, former Norman Topping Chair in Medicine and Public Policy at the Sol Price School of Policy at the University of Southern California, suggests that “this transition does not mark the ‘death’ of FFS.” He points out that the “FFS chassis is present in the shared savings models,” and he goes on to assert that “the role of FFS is merely being de-emphasized.” The real liability for the fee-for-service (FFS) reimbursement model, compared to its counterpart, is that the fee-for-service model has no mandates or incentives in place to encourage “best practices” regarding value.
There are still hurdles to overcome in the transition from fee-for-service to value-based reimbursement, but value-based care is here to stay, establishing its foothold in the healthcare industry, incentivizing cost-efficiency and quality, and creating structures that reward physicians for coordinated, appropriate, and effective care.
7- What impact does reimbursement have on healthcare facilities? (minimum 100 words)
Reimbursement systems provide incentives to health care providers and may drive physician behavior. Tao, Agerholm, & Burström (2016) conducted a systematic literature review that assesses the impact of reimbursement system on socioeconomic and racial inequalities in access, utilization and quality of primary care. Apparently, reimbursement systems seem to have limited effect on socioeconomic and racial inequity in access, utilization and quality of primary care. Capitation might have a more beneficial impact on inequity in access to primary care and number of ambulatory care sensitive admissions than fee-for-service, but did worse in patient satisfaction. Pay-for-performance had little or no impact on socioeconomic and racial inequity in the management of diabetes, cardiovascular diseases, chronic obstructive pulmonary disease, and preventive services.
8- Trends in Healthcare Reimbursement (minimum 100 words)
One of the fastest growing industries within the healthcare industry is technology. This is reflected on a national level, where technology continues to be the driving force behind everything from health, to education, to car manufacturing. The revolving door of new technology (think about how frequently Apple puts out a new product, or new phone) is intense for any industry, but perhaps healthcare has the most to lose if they resist the opportunities to integrate. A major concern for the industry at the moment is coordination of care – and technology is the force that will allow this dream to become a reality. Utilizing it properly to achieve these outcomes, however, is no simple task. Electronic medical records are theoretically a dream – but in practice, they are often clunky and are much harder for the older generation of physicians to embrace. New doctors, who are never without their tablets and smartphones, are willing to integrate new technology but many have grown increasingly frustrated with the industry’s stubborn nature. For this reason, it may be hard to keep healthcare desirable to the next generation; they don’t want to find themselves trapped in a stagnant industry.
For patients, too, the advent of various technologies in the last two decades has allowed them to more actively participate in care – sometimes much to their physician’s chagrin. While having access to unlimited health information via Google may be helpful to some, for many patients and their doctors it is a bone of contention. While some patients may have the health literacy necessary to parse out this information and turn it into a useful dialog with their physician, the majority do not. The average American reads at a middle school level, meaning that even basic medical jargon might as well be a foreign language. But even for health literate patients, technology has allowed them to almost demand to have more control over their care. Doctors are no longer necessarily the gatekeepers of information – and many of them are displeased at being displaced and are not chomping at the bit to welcome patients in partnership.
While many of these new changes are exciting and have promise for revamping our ailing healthcare system, it will also require enormous leaps of faith from not just payers and hospitals, but providers and patients. The lines between administration and clinical practice, to patients and families are becoming more and more blurred as the industry evolves – and physicians especially are finding themselves stuck in the middle of frazzled administrators with lots of demands and patients who are older and sicker than ever before. When you put it like that, it makes you think doctors aren’t paid nearly enough to be that stressed.
9- Conclusion (minimum 100 words)
· Bah, S., Almutawa, H. H. A., Alassaf, N. F. M., Al Hareky, M. S., Hashishi, A. S. M., Alkhater, Z. J. H., & Ajaimi, J. A. M. (2015). Pilot study of reimbursement practices in private healthcare centers in the Eastern Province of Saudi Arabia: To what extent do they meet international best practices? Perspectives in Health Information Management, 12(Spring).
· Khan, T., Emeka, P., Suleiman, A., Alnutafy, F., & Aljadhey, H. (2016). Pharmaceutical pricing policies and procedures in Saudi Arabia. Therapeutic Innovation & Regulatory Science, 50(2), 236-240.
· Morgan, S., Daw, J., & Thomson, P. (2013). International best practices for negotiating ‘reimbursement contracts’ with price rebates from pharmaceutical companies. Health Affairs, 32(4), 771-777.
· Tao, W., Agerholm, J., & Burström, B. (2016). The impact of reimbursement systems on equity in access and quality of primary care: A systematic literature review. BMC Health Services Research, 16, 542. http://doi.org/10.1186/s12913-016-1805-8