Health 422

Front 1

health business environment provider
(third party payer system)

Back 1

PROVIDER-
-receives variety of payments for a given product or service.
- most payments for services are established by regulation or contract
- receives payment unpredictably

Front 2

health business environment consumer
(third party payer system)

Back 2

CONSUMER*
- choice of provider frequently limited
- virtually impossible to distinguish quality of competing services
- often must rely on others to evaluate quality of available services
- may not pay full cost of services

Front 3

insurance concepts
(third party payer)

Back 3

-assume that the probability of staying healthy is .99, and the probability of getting sick is .01

- if you stay healthy, you will incur no costs, if you get sick you will incur a cost of 20,000

Front 4

Adverse Selection
(third party payer system)

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-occurs when those individuals are firms that are more likely to have claims are more inclined to purchase insurance than those who are less likely to have claims.
*underwriting controls for adverse selection:
- global rate for all insured
-community rating
-experience rating

Front 5

basic characteristics of insurance

Back 5

* POOLING OF LOSSES
- sharing of losses by a large group
- the prediction future losses with some accuracy based on the law of large numbers.

*RISK TRANSFER
- risk of losses is transferred from the insured to the insurer which is typically in a better position to pay the loss

Front 6

reimbursement methods
-per procedure

Back 6

mostly commonly used in outpatient settings

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reimbursement methods
- per diagnosis

Back 7

rate depends on the patient's diagnosis. currently used in medicare

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reimbursement methods
-per diem

Back 8

fixed payment per day. maybe stratified based on type of care.

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financial risks for providers

Back 9

- except for cost-based reimbursement, providers bear the financial risk that costs will exceed revenues
-primary difference between reimbursement types is the incentive for the provider to influence the revenue/ cost ratio

Front 10

commercial insurance

Back 10

(private insurer)
- issued by life insurance companies, property and casualty companies, and exclusively health insurance companies.
may be for profit(stock) or not for profit (mutual)

Front 11

self-insurers

Back 11

(private insurer)
- large organizations, both public and private often make a conscious decision to bear the risks associated with health care costs.
- usually employ an outside third-party administrator, but some firms set a wholly-owned subsidiary to provide administrative services

Front 12

blue cross and blue shield

Back 12

(private insurers)
- insurance programs originally offered by individual hospitals during the great depression.
-most are for non-profit

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MEDICARE

Back 13

(public insurers)
- established in 1966 to provide medical benefits for those 65 and older.

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medicare part A

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provides for hospitals and some skilled nursing home care
- payments are made through independent contractors called intermediaries

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medicare part B

Back 15

(optional) covers physician services, ambulatory surgical services, outpatient services, and other miscellaneous services
- payments are made my carriers

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MEDICAID

Back 16

(public insurer)
- joint federal- state program instituted to provide a medical safety net for low income mothers and children, and for the elderly and disabled who receive supplemental security income.
- each state establishes its own reimbursement program

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Hospital Revenue Cycle

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-registration
-service
-coding
-charge capturing
-claims processing/ billing
-remittance processing
-third party denial follow up
-patient collection

Front 18

Coding (transcription)

Back 18

process of translating the service documentation into billable charges

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Registration

Back 19

entry into the system where personal information is gathered

Front 20

charge capturing

Back 20

process of getting the proper charges associated with services into the system

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service

Back 21

patient care/ diagnosis provided by the hospital

Front 22

claim processing/ billing

Back 22

the process of filing claims with the third party payers and billing of individuals

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Remittance Processing

Back 23

posting/applying the payments and associated adjustments to the appropriate accounts

Front 24

third party denial follow up

Back 24

the process to collect from third party payers after the initial claim has been denied

Front 25

patient collection

Back 25

process of billing and collecting self pay accounts as well as balance due for co pays and deductibles

Front 26

rate setting and reimbursement management

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-very few patients actually pay the established rates
-blue cross, medicare, and medicaid and many managed care organizations do not pay billed charges
-rate structure must incorporate the effect of contractual allowances in the establishment of rates

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rate setting process

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1) determine required net income
2) determine patient payment composition
3) determine bad debt and charity deductions

Front 28

reimbursement goals

Back 28

generate the greatest possible financial return while providing increasingly costly services at a quality acceptable to both the community and clinical professions

Front 29

Accounts Receivable Management Goals

Back 29

1) minimize lost charges
2) minimize write offs for uncollectable accounts
3) minimize accounts receivable collection cycle

Front 30

carrying cost for accounts receivable

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opportunity costs arising from the investment of working capital in accounts receivable rather than in alternative uses

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delinquency costs of accounts receivable

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operating costs incurred from following up on delinquent accounts
-collection agency charges

Front 32

account receivable goals and objectives

Back 32

1) minimize unbilled services
2) minimize length of time to complete AR cycle
3) minimize credit and collection costs

Front 33

reducing third party payer processing time

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- get correct financial information at time of pre-admission oar admission
- ensure that statements for out as soon as possible, and are as accurate as possible
-follow up- by phone and document in writing- accounts which are more than 30 days overdue, earlier for bills with large balances

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third party processing time

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- consider discounts for prompt payment
- create a system to respond promptly for additional data
- direct deposits to an area bank

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third party payer system

Back 35

is an insurance system with a wide variety of insurance companies
-some companies are investor owned, some not-for-profit, and some are government sponsored
-some insurances are financed through premiums, some by society at large