Prospective Payment System In Healthcare

Pay-for-performance payment model – healthcare payment systems that offer financial rewards to providers who achieve, improve or excel their performance on specified quality of care and cost measures (HealthCare Incentives Improvement Institute, N.D.)

Retrospective reimbursement method was based on actual cost the providers assumed the previous year. On this method rates were evaluated retrospectively and costs were used to determined the amount paid to the provider and had no incentive to control cost. On the other hand, prospective reimbursement methods can determine in advance how much a provider is going to get compensated. (Shi & Sing, 2017) The way retrospective reimbursement contain perverse financial incentives happened when institutions increased their profits by increasing costs and this system payment method was based on costs. Due to this issue the method was changed to the prospective to avoid abuse of the system.

A mixed payment system combined with physician monitoring, will provide physicians with incentives to consider costs and benefits of different treatment options, which will lead to an efficient level and quality of care. (1,2)

When working as a medical office administrator you will need to know how to complete the different procedures dealing with physician billing and reimbursement. Reimbursements involves more than what you just get paid, it’s a long and often convoluted process that start when you patients first contacts your office. In order to get the correct reimbursement it is important that you know the basics about reimbursements which includes the correct coding. The way to understand the aspects of the business is to know the basic of Medicare. Physician reimbursement is a three step process. The first step of the process would be having the appropriate coding number of the service provided by utilizing the current procedural terminology which is commonly

The Inpatient Prospective Payment System is based on CMS (Medicare) standards because it is the largest reimburser. It was created to control rising healthcare costs by determining reimbursement prospectively. The costs of inpatient acute hospitals stays under Medicare Part A are fixed so that each patient case aligns with a Diagnosis Related Group (DRG).

Medicare changed overtime and in 1983 adopted the Prospective Payment Plan. PPS was designed to pay a facility a lump some to provide services for a set amount of patients covered by Medicare. One of the reasons behind it was to encourage health care practitioners to proved services in a timely manner in order to shorten the rehabilitation time of an individual.

The provisions of PPACA will affect Medicare’s payments to acute care hospitals and will constrain payment increases to these hospitals, restructure payments to address treatment inefficiencies, and then reshape Medicare’s disproportionate share hospital hospital subsidies. Also, the exception that permits physicians with ownership interests in a hospital to refer Medicare and Medicaid patients to that hospital will be eliminated for new doctor owned hospitals or those that did not meet certain criteria.

Based on the political and economic environments of states and the federal government the methods of health care reimbursement have been required to evolve. With the introduction of the Patient Protection and Affordable Care Act (PPACA) new laws have been set into place that has caused a stringent review of spending on health care. All care provided is being examined for effectiveness, quality, and the actual need of the service. Unnecessary health care functions are being screened and eliminated. The government and other insurance providers have begun to place cost containment measures in place only paying for those procedures that are deemed medically necessary for the illness that the patient is currently afflicted with. This has a direct impact on the monies that the government and insurance providers will reimburse for services. The following paper will look at the major types of reimbursement activates currently in place. The writer of this paper will also speculate on the future of health care reimbursement and how it will affect his current organization.

The Outpatient Prospective Payment System was developed to control the costs for healthcare services by using a bundled payment system. The Balanced Budget Refinement Act of 1999 mandated other

In 1998, CMS implemented a prospective payment system (PPS) for Medicare SNFs, replacing the prior fee-for-service reimbursement system.Under PPS, the Medicare program pays SNFs per day rates, which cover all routine services, ancillary services, and capital-related costs for a beneficiary's Part A stay. The program pays different rates for residents according to case-mix adjustments, which are based on residents' assessments (looking at the severity of residents' medical conditions and skilled care needs). The payment categories are called Resource Utilization Groups, or RUGs. Medicare pays

With PPS Medicare has developed diagnosis-related groups (DRGs) that groups clinical conditions together and based off the DRGs of a patient it then in turn provides a reimbursement rate to give the provider (https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/acutepaymtsysfctsht.pdf). The theory behind this style of reimbursement is that it give the hospital an incentive to efficiently treat a patient and quickly discharge the patient without wasting any unnecessary medical resources.

With the law, hospitals have the opportunity to receive increased Medicare payments as long as they increase patient education about care after hospital discharge, provide patients with community healthcare resources, and increase discharge instructions for patients suffering from heart failure (Burton, 2012). The Centers for Medicare and Medicaid Services (CMS) has threatened to reduce hospital payments to one percent if the patient readmission rates of “heart failure, pneumonia, and myocardial infarction” increase past a certain limit (Burton, 2012). State Medicaid agencies will grant providers reimbursement if “comprehensive transitional care” is provided to patients (Burton, 2012). The law also offered $200 million towards projects aimed at increasing the number of advanced practicing nurses in areas including: chronic care, preventive care and primary care (Burton, 2012). Preventive care will allow nurses to reduce the rates of high acuity patients in their hospitals. If the PPACA fails to improve care transitions, the CMS plans to carry out other policies. These policies

Any proposed policy to improve healthcare must address the current payment method, and the rising cost of healthcare. The common reimbursement method for healthcare services is the fee-for-service payment model. It requires providers to figure-out all incurred costs to render services for patients. Additionally, providers need to determine what is the insurer proposing to pay, which thought to reward quantity over quality. An alternative to this model is using a bundle

Medicare has changed the way it pays hospitals for services delivered to clients with Medicare. Instead of only paying for the amount of services the hospital offers, Medicare also pays hospitals for providing top quality health care services. The Centers for Medicare and Medicaid Services (CMS), a federal agency that runs the Medicare program, is altering the way Medicare compensates for hospital care by giving rewards to those hospitals that delivers higher quality and higher value service to clients (Medicare.gov, n.d.). At the beginning of October 1, 2012, the Affordable Care Act (ACA) permits Medicare by reducing payments to acute care hospitals with surplus readmissions that are paid under CMS 's inpatient potential payment system (Medicare.gov, n.d.). Medicare has information regarding how the hospital 's quality care affects the disbursements it receives from Medicare. The Hospital Value-Based Purchasing (VBP) Program, created by the ACA,

The passing of the Deficit Reduction Act of 2005 made an additional incentive possible for acute care hospitals who take part in the HCAHPS survey. Since July 2007, hospitals who are subject to the Inpatient Prospective Payment System (IPPS) annual payment update provisions need to collect and submit HCAHPS data if they want to collect their full IPPS annual payment. Inpatient Prospective Payment System hospitals that ignore to report the required quality measures, which includes the HCAHPS survey, could get an annual payment update that has a reduction of 2%. Hospitals like Critical Access Hospitals, can also participate in HCAHPS if they want to.