Each type of payment method. Introduction: Payment method refers to the medium through which payments are made in the healthcare sector. Each method is defined by unit of payment. Cost based payment method: This is a method which is common in health insurance. As per cost based payment method, the insurance companies pay the hospitals or the doctors on the basis of the cost of the health care services provided to the patient. Charge based and discounted charges payment method - The payers generally reimburse the amount paid, based on the rate schedule prepared by the provider. Such a schedule is referred to as a chargemaster. In such cases, the payers are dependent on the providers who tend to charge high in competitive market. However, there are payers who have good relationship with the providers or payers have negotiating power as they bring large number of patients to the providers. Per procedure payment method : Under this method, payment for each service is paid separately by the provider. Payments are made separately even for the same service that is offered several times in a day. It has high administration costs associated to it. This method increases productivity but lack efficiency. It may encourage the provider to delivers services more than required. Per diagnosis payment method : In this method, the rate at which the provided is paid is calculated on the basis of the diagnosis of the patient. Diagnoses require higher costs and thus have higher reimbursement rates. Per diem payment method : Under this method, the provider is paid a specified or fixed amount for each day, irrespective of the nature of the services provided. These are applicable only to inpatient settings and can be stratified. Bundled payment method : Under this method, a single payment is made for all the services delivered. It is doesn’t consider if the services have been delivered by single or multiple providers. Capitation payment method : Under this method, the provider receives a fixed amount for the covered life for a period, irrespective of the amount of services provided. It is generally used by the managed care plans. Although, the method have negative effects on the provider’s managerial and accounting policies.

EBK HEALTHCARE FINANCE: AN INTRODUCTION

6th Edition

ISBN: 9781567937428

Author: Gapenski

Publisher: YUZU

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Solution Summary: The author explains the different payment methods used in the healthcare sector.

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