Revenue Determination Bases

Typically, net profit is measured on a quarterly or annual basis. When compared with a company net profit during other periods, it can provide a useful measure for how profitable a company is over time and the overall performance of the company & management team.

Apple Inc. designs, manufactures, and markets personal computers, mobile communication devices, and portable digital music and video players and sells a variety of related software, services, peripherals, and networking solutions. The Company sells its products worldwide through its online stores, its retail stores, its direct sales force, and third-party wholesalers, resellers, and value-added resellers. (Source: Company Form 10-K)

It is essential for an administrator to understand how private and government payers impact actual reimbursement. Government payers have a standardized benefit structure. The one benefit is that registration staff have an easier time calculating payment due (copayments) for service and can set up payment arrangements. Since the most significant proportion of funds coming into a healthcare organization is usually payments from third-party payers, therefore, it is critical to know how each reimbursement affect the others that come in. Healthcare organization may have hundreds of different payer’s relationships in the form of different contracts that have their own rates of payment that are usually different from other payers for an identical

The reimbursement method used at St. Anthony’s hospital is quite distinct depending on the party doing the payments. Payments are received from Medicare, Medicaid, private insurers and also directly from patients. The party responsible for Medicare payment is the Federal government and it offers payment mainly for the elderly. With the Medicare payment, hospitals receive a flat fee depending on the case. According to Gee (2006), most hospital revenue has declined because of the revised payment set by the Diagnosis-Related Groupings. The fee for most cases varies according to the Diagnosis-Related Group (DRG) it can be classified under. For example, Medicare pays only a fixed amount for an elderly patient suffering from pneumonia regardless

Since 1984, Medicare patients have been serviced under the prospective payment system of the Medicare program. Under this system, primary care providers are reimbursed for their services using a fixed payment for each patient that is determined by the patient’s diagnosis-related group at the time of the admission. Therefore, under the prospective payment system a hospital’s reimbursement is unaffected by the actual expenditures that are required to care for a patient.

In the past several years, there have been several changes in economic policy at federal and state levels. The two economic policies that present to be the most precedent for healthcare leaders with concern to facility reimbursement are the Affordable Care Act (ACA) and the switch from volume to value reimbursement. First, there is the ACA policy, which have affected healthcare facilities and their reimbursement methods. In fact, ever since this policy was implemented, provider reimbursement has started to decrease in terms of fee-for-service payments (The Common-Wealth Fund, 2015). In other words, the intention of this policy was to provide budget relief to the government payers as well as giving providers an incentive to provider patients with great quality of care.

Over the past fifty years, the method in which healthcare services are funded has gone through significant changes. The country has seen the expansion of insurance from paying medical bills for hospital stays, to the creation of managed care, and the passing of the Affordable Care Act (ACA). While the process has not been without challenges, healthcare administrators must continue to analyze past funding systems to understand the oversights and misinterpretations to prevent complications in the future. This paper will investigate fee-for-service practices and how these practices have progressed to uncontrolled utilization.

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 has instituted policies to help regulate cost on these outliers which includes standardized payments, risk adjustments and bundle payments. CMS uses standardized payment rates to determine its Medicare spending per beneficiary (MSPB) .Medicare standardizes the allowed amount for the MSPB. This method looks at the different Fee for Service (FFS) payments and identifies the factors to adjust. Once you remove the differences this should help even out the variability in payments and give a more accurate picture of how resources

In 1983, the Medicare prospective payment program was implemented which allowed hospitals to be reimbursed a set payment based on the patient’s diagnosis, or Diagnosis Related Groups (DRG), regardless of what treatment was provided or how long the patient was hospitalized (Jacob & Cherry, 2007). To keep the costs below the diagnosis related payment, hospitals had to manage efficiently the treatment provided to a client and reduce the client’s length of stay (Jacob & Cherry, 2007). Case management, or internal case management “within the walls” of the health care facilities was created to streamline costs while maintaining quality care (Jacob & Cherry, 2007).

Medicare is the nation’s largest health insurance program which benefits to more than 40 milliion Americans. However, billing and administrative fee overly cost that Medicare will soon can not handle the fee which leads to the disruption of health care in the U.S. The Medicare reform, various choices for Medicare and reduce fee-for-service plan are proposed to ensure Medicare program to continue. Medicare reform must be contained by injecting economic efficiency into the program, realigning the economic incentives of those who demand medical goods and services and those who provide them. Reduce fee-for service seems to be easy but not since there are many fees and charges should be taken care of in the form of insurance providers. While Medicare

Fee for service is a payment model where services are paid for separately, in health care, as opposed to bundeling them. It gives an incentive for physicians to provide more treatments because payment is dependent on the quantity of care, rather than quality of care.

Under payment, an ideal healthcare system will have the challenge of delivering higher quality for lower costs. The system’s payment reform will involve a transition from fee-for-service to global from systems that are value-based important for the achievement of the overall healthcare goals. An ideal healthcare payment system will give a great deal of support to value-driven system of healthcare delivery (Kent, 2013). The fee-for-service payment system will be of great importance to the healthcare system as it will help control the costs of health care.

However, employers typically require employees to share the cost of the plan premium, usually through employee contributions right from their paychecks. On the other hand, most insurers require the employer to cover at least half of the premium cost for employees. Thus, employers are free to require employees to cover some or all the premium cost for dependents, such as a spouse or children. Still, a co-payment is a flat fee that the patient pays at the time of service. After the patient pays the fee, the plan usually pays 100 percent of the balance on eligible services. Additionally, eligible services are those services that the plan includes in its coverage. Furthermore, the fee usually ranges between $10 and $40. Therefore, co-payments are common in HMO products and are often characteristic of PPO plans as well. Under HMOs, these services almost always require a co-payment for office visits, which consists of a network primary care or specialist doctor, mental health, practitioner or therapist, emergency room, but the copay waived if the hospital admits the patient from the emergency room and prescription drugs in which the co-payment could range from $10 to $35 per prescription. Still, many insurers use a formulary to control benefits paid by its plan. Therefore, a formulary made up of generic and the insurer’s list of preferred brand-name drugs; however, generic drugs tend to cost less and

The positive outcomes that have resulted due to value base programs have caused the model to gain traction and ignite one of the largest changes in history in the health care marketplace. By linking reimbursements to service quality, insurers such as the Centers for Medicare and Medicaid Services have facilitated a massive leap forward in the performance of United States health care providers. This achievement is a considerable accomplishment in the face of an institution that has received reimbursement from insurers via a fee-for-service model during the last 75 years. Soon, valued based payment models will represent the norm as more insurers support initiatives such as shared savings program, integrated clinical care, and accountable care payment models.