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Medicare Payment Mechanisms In Healthcare

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Payment mechanism are contracts among patients, providers, and payers to provide health care services. Payment mechanisms attempt to improve management, and quality of care. There are several hospital payment system that have both advantages and disadvantages on cost containment and provider behavior. Four of these payment systems include, fee-for-service, per diem, DRG based payment system, and capitation. Cost containment as a policy issue is related to the question of what the right amount systems should pay for health care (Carrin, 2003). In part II, the difference in Medicare payment methods for outpatient services versus physicians’ services will be discussed. The difference between global payments and bundled payments will also be covered. …show more content…

Physicians are paid by Medicare based on a list of services, and their payment rates (Medicare Payment, 2014). Under this payment method, the unit of payment is usually an individual service, like an office visit, or diagnostic procedure, and the products range from general services to bundles of services associated with surgical procedures (Medicare Payment, 2014). All of the services are reported and classified to CMS according to their Healthcare Common Procedure Coding System (HCPCS) (Medicare Payment, 2014). Unlike OPPS, the fee schedule payment method does not use APC codes when billing, this method only uses the HCPCS codes (Guidi, 2010). When determining the payment rates for fee schedule, The Centers for Medicare and Medicaid Services (CMS) considers the amount of work required to provide the service, expenses that are related to maintaining the physician practice, and liability insurance costs (Medicare Payment, 2014). The article (2014) states that the values for these three sources are adjusted by variations in the input prices for different markets, and then the total is multiplied by a conversion factor that is a standard dollar amount. According to the Medicare Payment Advisory Commission (2014) payment rates are based on relative rates called relative value units or RVU. These values account for the relative costliness of the inputs used to provide physician services, work, expenses and liability costs (Medicare Payment, 2014). When calculating the payment rates, the three RVU values are adjusted to reflect the price level for related inputs in the local market, and separate geographic practice cost indexes are used for this process (Medicare Payment, 2014). The article (2014) states that the payment schedule fee is determined by adding the adjusted weights and multiplying the total by the fee schedule conversion factor. For most fee schedule services,

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A Medicare Severity-Diagnosis Related Group (MS-DRG) is a system of sorting a Medicare patient’s hospital stay into many groups in order to expedite payment of services for Medicare patients (CMS, "Acute Inpatient PPS") . The MS-DRG is the most-widely used system today as a result of the rising number of Medicare patients. Payments are calculated using wage variants, geographic locations, and the percentage of Medicare patients that a hospital treats (CMS, "Acute Inpatient PPS"). In short, the Medicare Severity-Diagnosis Related Group (MS-DRG) system enables the Centers for Medicare and Medicaid Services (CMS) to provide improved reimbursements to hospitals serving more severely ill patients. Hospitals treating less severely ill patients will receive less reimbursement.

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Capitation payments are prearranged or pre-established payments received by a physician, hospital or clinic for patients or enrollees in a healthcare plan. Fee for services are when a physician or hospital receives a fee for services rendered. Pros and cons of capitation depends on if the enrollees ' use the services. If patient cost go over the capitation payment accepted by the provider they loose money. If cost don 't go over the payment the provider pockets what ever money is left over.

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Over 28 million people in the world receive health insurance through the Medicare program (Gornick, n.d.). The medicare program was designed to operate throughout the nation with a set of uniformed benefits and cost-sharing requirements in the form of deductibles and coinsurance. However, over the years the program data indicated that the Medicare premiums and deductibles, benefits paid out varied significantly by state of residence of the beneficiary (Gornick, n.d.). These variations are due to part of the fact that reimbursements are based on local physicians' prices. Many policy analysts suggested that the geographic variations in Medicare reimbursements should be reduced (Gornick, n.d.).

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Dear healthcare staff: The hospital is currently under financial difficulty and as a hospital administrator, I would like to explain to you how the Medicare (DRG) works. First, Medicare is a federal-sponsored health insurance program for individuals who are older than 65 years. Medicare also covers people with major debilitating conditions, such as End Stage Renal disease without any limit to household income. In order to qualify for Medicare, a person has to be a US citizen or with at least 5 years of permanent residence in the United States. Medicare is divided into four parts, namely: Medicare part A, B, C and D. The Medicare part A covers the inpatient cost of the hospital and skilled nursing facilities; Medicare part B focuses on outpatient

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Both beneficiaries and Medicare paying for these services can be

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The first model provides retrospective reimbursement based on inpatient prospective payment system. The second model provides retrospective reimbursement passed on care episodes of extended set times (1, 2, or 3 months) post discharge from hospital; the third model provides payments associated with post acute care episodes following discharge from hospital; and the fourth model offers prospective payments which include all services provided during hospitalization and includes all 30-day readmissions. These Bundled Payment Plans enable providers to focus on providing more effective care that focuses on patient outcomes and research, with the awareness that a standard required care be provided within a set allotment, rather than reimbursement based on quantity of services provided, or certain billing code, as currently

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Many uninformed individuals believe that Medicare is only a single program, this is a common mistake. Medicare is actually three different programs. Medicare Part A, the first program, financed by payroll taxes offers coverage of inpatient hospital costs and some of the costs of long-term care for the elderly. Medicare Part B covers the costs of both physician expenditures and outpatient hospital services. Part B, different from that of Part A, is financed through enrollee premiums and the general revenues of the government.

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Medicare is only a federal based program. One of the other differences between the two are Medicaid will cover long term care and assisted living as long as it is necessary, where Medicare does not. The similarities that I found among the two are the fact that they are both funded federally, and that they are both

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b) Medicare electronic Health Record Incentive programs for eligible professionals: Mainly, it is a system where the incentive programs are to vitalize the health professionals and hospitals to adopt and upgrade to the use of electronic health record technology. c) Value-based payment modifier: Moreover, it is a system which provides a payment for the group of physicians under the Physician Fee Schedule of Medicare where the quality of care is considered rather than the cost of care during the performance period for the physician. and with these processes are imported into the Merit-based Incentive Payment System. Correspondingly, physicians and other health professionals will be determined in Merit based Incentive Program system under four performance categories i) Quality

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Submitting an electronic eligibility request to the patient’s insurance company prior to their appointment is also helpful. This will let the patient know what they will be responsible to pay, after insurance, and includes any co-pay if it is due. Eliminating the possibility of a surprise bill will provide a quicker payment. The process of managing the revenue cycle is complex, but effective. As long as staff members know what role they play, and how to fill that role effectively, there should be few issues to

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It's how Medicare and some private insurance companies pay hospitals for the care of patients (Cherry, Jacob, 2014 p. 109). The payment is fixed and predetermined per diagnosis. If the hospital spends less than that set price to treat that patient then they make money, if they spend more they lose money. Prompting hospitals to reduce services as much as possible so they can make a profit. Cherry, B., Jacob, S.R. (2014).

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Because Medicare is run by the federal government, its coverage, rules and guidelines are basically the same everywhere in the United States. With this program patients pay part of the costs through deductibles for hospital stays and they are required to pay monthly premiums health care services. Medical bills are paid from trust funds which those covered have paid into. Medicare has four parts: Part A: offers

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However, younger people may qualify if they have received 24 consecutive months of Social Security disability benefits, along with other specific requirements. There are four parts to Medicare’s benefits. Original Medicare includes Part A and Part B. Part A generally covers hospital care and hospice care, and Part B (Original Medicare) covers services such as medical care, durable medical equipment, and supplies, and some preventative services. Part A is funded primarily through a dedicated payroll tax paid by employers and their employees, while Part B is financed through a combination of general revenues, premiums paid by beneficiaries, and interest.

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(AAPR, January 1st, 2011) Medicare part B is the part that pays for a portion of your doctors’ visits, medical equipment, outpatient procedures, and so on. Part B required you to pay a monthly premium to Medicare, and there is a small deductible that you must reach before Part B

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It is also for qualifying individuals with a disability. Medicare has several parts that separate each program from the others. Part A which covers hospital bills, along with home health care. Part B includes things such as lab work, physical therapy, and outpatient costs. Part D covers prescription

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