Jun 30, 2010

Provider Reimbursement Approaches

Add a Note HereFee-for-Service
Add a Note HereUnder this payment method, health care providers charge separately each time services for care are rendered. This is a common reimbursement method under traditional indemnity plans. Providers commonly set their own charge and are paid accordingly. Sometimes, insurers negotiate a fee schedule that establishes the maximum amount the plan will pay for any given medical procedure or service. Fee-for-service has been the most common provider reimbursement approach for the traditional prepayment, indemnity, and comprehensive plan designs.

Add a Note HereCapitation
Add a Note HereUnder capitation, providers are paid a set amount (generally monthly for primary care providers (PCPs)) for each plan participant, regardless of the number of visits or services provided.
Add a Note HereCapitation payment methods are used extensively by HMOs. This form of payment shifts some risk to the medical provider, who accepts the capitation amount, assuming the increased enrollment will level out the risks. Some plans reimburse PCPs and certain specialists using capitation, and have a fee schedule for other medical specialists.

Add a Note HereOther Provider Reimbursement Approaches
Health Care Purchasing Cooperatives/ Coalitions
Add a Note HereSome employers have banded together into purchasing cooperatives to have greater health care buying power in the marketplace. Such an arrangement is used to gain favorable pricing from medical providers because of the large volume of business that can be supplied. This means of purchasing health care can be particularly attractive to a small employer who would not be able to procure the same discount on services that a large employer could. In some ways, the insurance company or managed care provider plays this role for smaller groups. However, the emergence of health care purchasing cooperatives provides another alternative for employers to negotiate pricing with medical providers.


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