Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key


Play button


Play button




Click to flip

21 Cards in this Set

  • Front
  • Back
Episode-Based Global Fees and more...
Contact Capitation
 used for large SCP groups.
 hybrid of Ffs and Capitation.
 SCP is paid a lump sum per unique, nonduplicated patient per year.
 Payment amount is adjusted for:
 diagnosis
 severity
 age/sex
 budgeting (all specialists’ payments reduced/increased pro rata)
 Carve-outs for difficult cases, if medically necessary.
 The SCP Group must have good:
 patient profiling
 peer review
 internal management/organization
 for example, IPA's.
Advantages of Contact Capitation
To specialists
 Similar to Ffs
 easy to understand.

To the MCO
 Encourages specialist to be cost-efficient
 Makes SCPs involved in Disease Mgmt and Preventive Care
Market Share Capitation
 Used only for specialists.
 Pays groups of specialists pro rata to market share.
Advantages of Market Share Capitation to the MCO:
 Fewer data items to track than in Contact Capitation.
Disadvantages to the MCO:
 only used for large groups of specialists
 Can’t be used for newly-formed groups
 Only works for single-specialty groups
Direct Contracting Between Physicians and Employers
 Avoids the middle man (the MCO)
 The provider group must include PCP’s, SCP’s, and a hospital.
 The employers self-insure and use stop-loss reinsurance.
 Reimbursement is Fee-for-service.
 Incentive/bonus arrangement between a hospital and its physicians.
 Rewards physicians for developing clinical guidelines which:
 improve quality
 reduce practice variation
 reduce cost
 Illegal under federal programs
Reimbursement for Internet Consultations
 Reimburses e-mail at a flat dollar amount.
 Allows doctors to keep up with their chronically ill patients
Quality-Based Incentive Arrangements
Problems with incentives based on cost/utilization:
 denial of care
 legal liability
Better incentive/bonus arrangements are based on:
 Quality
 preventive care
 patient satisfaction
 HEDIS reports
 Compliance
 practice guidelines
 proper referrals /documentation
 advice given
 Efficiency
 e-commerce use
 Penalties for lawsuits
Fee Incentives
 flat fee to encourage physician behavior, e.g. for using the MCO’s DM program.
 can also be used for:
 preventive care use
 proper documentation
 good reporting
A reimbursement method should:
 Align the physicians’ incentives to match those of the MCO
 encourage Quality and Compliance
 discourage Over-utilization or Under-utilization

To discourage under-utilization (denial of care):
 Don’t use capitation
 Don’t use too high a withhold
 Use incentive programs with Pools of Doctors
 Base bonuses on factors besides low costs /utilization
(as described above)
 be Competitive
 make physicians Happy (ease of recruiting)
 be Equitable
 Be simple to understand
 Not put providers at too much risk
Other Recommendations to an MCO in dealing with Providers
 use Peer Review
 Give feedback to physicians
 Make doctors aware of the risks (especially for capitation)
 Develop good relationships
 Create clinical guidelines
 Collect accurate, timely data
 quality measures
 Negotiate good contracts. Terminate poor contracts.
 Avoid legal liability exposure.
 Avoid internal conflicts between providers
 Strong leadership.

An exam question may be worded as follows: “Describe provider reimbursement methods by which an MCO can provide quality care while still meeting its financial obligations.” This question refers to the above two lists.
Results of Having a Good Provider Reimbursement System and Relationship
 Quality
 Meeting all financial obligations
 High managed care penetration
 Easy recruit of new physicians; growth of the provider network
Reasons why a hospital, PPM, or Specialist Group might fail under a capitation contract
 Accepting too low a rate
 failure to accurately predict costs, demographics
 Catastrophic cases; severity mix, case mix
 high administration costs
 Accepting too much risk (drug use or referrals)
 Not understanding the risks
 Mismanagement of funds
 poor medical information systems
 Misalignment of financial incentives (of the doctors vs. the MCO)
 Failure by MCO to give proper feedback
 For PPM’s:
 All of the above, plus:
 Too much focus on new acquisitions, not efficiency and quality.
 physicians’ productivity dropped

A PPM (Physician Practice Management company) is a for-profit organization that buys and owns physicians’ practices.
The future of the Healthcare Market – 2 Possible Structures
Vertical Integration
 a multi-provider group contracts directly with employer groups
 No middle-man
 best reimbursement method: Global Capitation.

 the payment system must align the incentives of all member providers
 Would require legislative changes.
Horizontal Integration
 “Focused Factories” for each type of disease
 Easier for consumers to compare prices.
 best reimbursement method: Global Fees.
The future of Defined Contribution (DC) health plans
Trends will include:
DC plans are employer health plans in which the employer makes a fixed dollar or fixed percentage contribution towards the cost of ees’ insurance.

 Greater ee choice of health plans (but this is difficult for small groups)
 Direct contracting between physicians and employers (to lower costs)
 Giving consumers more control
 increased use of the Internet
 to educate ees
 to compare prices
 to automate enrollment
 To provide medical care
 on-line support groups
 e-mailing with doctors
The future of Provider Reimbursement
 Vertically Intergrated systems — Global Capitation.
 Horizontally Integrated systems — Global Fees.
 Internet services — FFS.
 Blending of methods will be common
 Incentives based on quality/compliance/efficiency, not just cost.
 Risk adjustment will be used more