(Answered) Risk-Based Reimbursement

(Answered) Risk-Based Reimbursement

(Answered) Risk-Based Reimbursement 150 150 Prisc

Week 5 Assignment

Risk-Based Reimbursement

For your assignment, a primary care physician is often reimbursed by Health Maintenance Organizations (HMOs) via capitation, fee-for-service, relative value scale, or salary. Capitation is considered as a risk based compensation.

In an effort to understand the intricacies involved with physician reimbursement, particularly in an era of health care reform, identify and interview an expert in the field, such as:

  • Hospital Administrator
  • Managed Care Organization (MCO) executive
  • Health care Consultant
  • Legal Professional

Assumption: MCOs use risk-based reimbursement for primary care physicians.

Ask the following questions in the interview:

  • What kind of risk do the MCOs assess?
  • Does risk-based compensation limit the freedom of primary care physicians in any way in terms of patient care? Why or why not?
  • How does the capitation model of reimbursement work? Do physicians generally prefer one model over the other? Why or why not?
  • Why do HMOs prefer the prepaid, monthly premium?
  • Is pay-for-performance a better model than existing models of compensation? Are there limitations to it as well?

Feel free to add additional follow-up questions for depth and clarification as you see fit.

Create a 4- to 5-page report in Microsoft Word document, analyzing the responses provided (which should be included as part of the report) using the evidence from the literature to help support or refute the responses provided.

Sample Answer

Risk-Based Reimbursement

It has emerged that when it comes to the healthcare system, the government is a good manager of the system performing even better than the private sector. This occurrence has raised numerous concerns when it comes to healthcare delivery as the cost of medication and health insurance has risen and this has a significant effect on employers. Consequently, the government has come up with various initiatives aimed at providing high-quality healthcare and minimizing the cost of providing health benefits. Many healthcare organizations in the United States have adopted these strategies in order to achieve these goals. The enactment of the Maintenance Organization Act of 1973 led to the creation of the Managed Care Organizations (MCOs). According to Butler (2018), the managed care section of the healthcare sector deals with health insurance for American residents. Well-known companies such as Aetna Incorporation, United Health Group Incorporation and Anthem Incorporation offer both government sponsored and private insurance, in the forms of Medicaid and Medicare. As a result, the management care industry has gone one to accomplish a lot more than it was anticipated.

The Kind of Risks Assessed by MCOs

The primary role of MCOs is to establish ways of decreasing risk and enhancing the care quality delivered to patient by developing effective risk management strategies that help in risk prevention and revenue loss. Executives in MCOs have a lot to do with regards to the risks to be evaluated given that there are numerous risks affecting healthcare networks. Physicians find themselves at the center of MCOs as integration and arrangements become intricate with each passing day. Contracting of physicians presents various risks. Some of the aspects that are of key importance to executives include specialty, location and market comparability. Legal frameworks are also continuously changing requiring these executives to continually observe the regulatory changes which presents further risks. The main risks affecting care systems and networks that are taken into account by executives in MCOs revolve around issues related to joint practice, the implementation of rules and regulations and denials management. Welker (2015) posits that is imperative to comprehend the dynamic forces of the environment for the MCOs executives.

Risk-based Compensation and the Freedom of Primary Care Physicians

The freedom of primary care physicians is limited by risk-based compensation particularly in terms of patient care as it openly blocks the nature of services offered under the MCOs contracts through maintenance of a fee-for-service or conveying them to distinct and limited benefit plans. The plan is exclusive and it has a way of reverting actions used by primary care physicians to ensure financial success. Additionally, the freedom of primary care physicians to provide care to patients suffering from chronic illnesses and require regular and specialized treatment is limited because of the high costs of operating. Such treatment can result in lower financial gains for primary care providers since they have an obligation to cater for the expenses involved. Furthermore, the reduced rates linked to risk-based compensation model hinders various primary care physicians from getting sufficient funds necessary to provide the best preventive healthcare services and even compete healthily in the highly competitive managed care service environment (Bazzoli, 2021).

How the Capitation Model of Reimbursement Works

The capitation model is a payment system that is utilized by MCOs with a goal of controlling the costs of healthcare. This is done by identifying how healthcare resources are utilized by shifting the financial risk of care provision to physicians. The capitation model of reimbursement is also used to measure the rate of resource usage to make sure that patients do not receive inferior care. The payment system is grounded on payment per person system rather than the typical payment per service system. Under this model of payment, healthcare practitioners are paid remunerated a fixed amount of each registered patient assigned to them for a defined period of time irrespective of whether that person seeks care services or not. Physicians normally go into a contract with a Health Management Organization (HMO). Through this contract, the patients who are enrolled are assigned to the various care providers and compensation is paid on a basis of the average usage of medical care services by the patient. Specialists prefer the capitation model of reimbursement as it pays them one flat rate even if their patients do not seek care in the future. Nonetheless, many healthcare providers have contended that this model can result in increased referrals. Furthermore, there is a causal dissatisfaction from physicians as capitation restricts their professional independence. A patient registered on the physician roster may need care services outside the scope of a physician’s field (Ajijola, Ojikutu, & Adeleke, 2018). Primary care physicians prefer fee for performance which is based on the performance of the physician. The fee for performance model limits patient care since the physician can only provide the healthcare services that a patient has paid for. Basu et al., (2017) explain that each model is unique in nature and in the end limits the scope of patient care that can be offered.