Ch 4 Reimbursement Methodologies

Reimbursement Methodologies

Retrospective

vs.

Prospective

This is the amount of the billed charges that insurance will allow to be billed. This is the amount that patients will pay their co-insurance on.

Example: We billed $500 for a level 1 E/M and per our contract with BCBS, they will allow $300

Allowable Charges

This is the cost for a unit of service, as determined by the provider.

Example: We will bill $500 for a level 1 E/M visit

Billed Charges

Billed vs. Allowable

Do the math

​Cost sharing is based on the ALLOWABLE charge, not the billed charge

Hailey receives an EOB (explanation of benefits) from BCBS. It shows that her doctor billed $500, and that insurance allowed $200.

If Haileys deductible has been met, and her cost sharing is 20%,

She owes the provider $40 of this bill

Draw

Now its your turn!

Draw

Now it's your turn!

A predetermined list of fees/allowed amounts for certain services.

Most often used for physician, lab, and radiology services

Contracting Unit = the service

Fee Schedule

Negotiated reduced fees for members.

Insurance may agree to pay for 64% of a total claim.

This is rare now, but cancer care and childrens hospitals may still use this.

Contracting unit = the claim

% of Billed Charges

Commonly used in hospital inpatient setting.

Payment is made on a per-day basis not a per-service basis.

Contracting unit = the day

Pay different per area (OB vs. Neuro)

Per Diem

​Retrospective Reimbursement Methods - actual resources expended

Multiple Choice

What type of retrospective reimbursement method is this?

Alyssa is working with a patient that has BCBS. The patient wants to know their estimated costs. Alyssa pulls the contract matrix and tells the patient that BCBS will allow 53% of the billed charges so the patient will be responsible for her co-insurance on 53% of her service.

• Fee Schedule

• % Billed Charges

• Per-Diem

• Alimony

Multiple Choice

What type of reimbursement methodology is this?

Nannette is working with a patient who wants to know their estimated costs.

Nannette pulls the contract matrix and tells the patient that she is expected to be hospitalized for 10 days, and her insurance will allow $200 per day. The patient will be responsible for her co-insruance on $2000

• Fee Schedule

• % Billed Charges

• Case Rate

• Per Diem

Prospective Reimbursement

What is it?

-Payment rates are set in advance for the fiscal year

• Not automatically based on hospitals past or current costs

• Considered payment in full

  The Hospital will suffer the loss or benefit from the surplus

  • this creates an incentive for cost control

per member per month (PMPM)

Per head

Payer has no uncertainty to cost.

Contracting unit = member

Capitation

Insurance pays one amount for the entire encounter regardless of services provided

Contracting unit = encounter

​​Case Rate

Insurance pays one amount and covers multiple providers.

Example: Global surgical package

(includes pre op post op etc) Contracting unit= episode

Global Payment

Lump sum paid for entire episode of care for an illness for set timeframe. Has a trigger event.

Example Hip fracture

Contracting unit=Episode

Bundled Payment

​Prospective Reimbursement Methodologies

Fill in the Blank

use one of the following words to describe the payment method:

Capitation, Case, Global, Bundled

Dr. Jones receives $200 per month for each of his BCBS patients

Fill in the Blank

use one of the following words to describe the payment method:

Capitation, Case, Global, Bundled

A patient has late stage DJD of the ankle. This triggers insurance to pay one lump sum for the anticipated amount of care this patient will need, up-to and including surgery and post operative care. Once the ankle has been replaced or the DJD is cured, the episode of care is considered over.

Fill in the Blank

use one of the following words to describe the payment method:

Capitation, Case, Global, Bundled

Dr. Laura OBGYN received one payment for all of her BCBS patients that are pregnant, and this covers all of their care.

Fill in the Blank

use one of the following words to describe the payment method:

Capitation, Case, Global, Bundled

BCBS pays the hospital $3500 when one of its members has an appendectomy. The hospital uses that money to pay the 3 different providers who did the pre op ecam, the surgery, and the post op care. It also covered the surgical tray/supplies

What do you think?

Look at this from two perspectives, provider and payer

​​Retrospective Payments

What are some critisicms of this method?

From whose perspective?

Share your thoughts!

Prospective Payments

​Look at actual costs vs. $ received

​Pros and Cons of the two methods of reimbursement

Match

Match the following

• method that pays for services actually performed

• method that pays predetermined amounts

• A

Retrospective

Prospective

A

• Retrospective

• Prospective

• A

Match

Match the following

• PPS

• Retro

• A

Capitation

Per Diem

A

• Capitation

• Per Diem

• A

Match

Match the following

• PPS

• Retro

• A

Case Rate

Fee Schedule

A

• Case Rate

• Fee Schedule

• A

Discussion Board Topic

​Lets Talk about ACO's

-Providers/Organizations are responsible for quality care and cost control

• one sided risk vs. two sided risk

• population based

• Uses prospective payment methodologies

If Giant ACO saves money, so does CMS. How is money saved? Less complications

• Page 59-61

Make sure you read about Risk Adjustment and DRG's in Chapter 4 before taking the chapter 4 Test!