Types of Reimbursement - Insurance payment to Provider

Fee-For-Service


Fee-for-service is a method of payment where the provider is paid a fee for each procedure performed and billed.

Global Reimbursement

Global reimbursement is a method of payment where the provider is paid one fee for a service that consists of multiple procedure codes that are rendered on the same date of service or over a span of time rather than paid individually for each procedure code.

If a provider bills for several individual procedure codes that are covered under a global procedure code, which is referred to as “unbundling,” Medicaid Program Integrity will audit the provider’s billing.

Cost-Based Reimbursement


Cost-based reimbursement, which is sometimes referred to as a per diem rate or an encounter rate, is based on the provider’s actual costs for rendering services to Medicaid recipients. Providers who are reimbursed on a cost basis are: hospitals, county health department clinics, federally qualified health centers, hospices, intermediate care facilities for the developmentally disabled, nursing facilities, rural health clinics, and state mental hospitals.

Capitation Reimbursement

Health maintenance organizations (HMOs) and certain other providers are prepaid a fixed amount each month for each recipient (per capita) who is enrolled to receive services from that HMO or provider.


Provider Reimbursement Type - Commercial Products

PCP/Specialist Reimbursement — When joining Insurance , all PCPs and specialists agree to accept Insurance ’s fee schedule and the payment and processing policies associated with the administration of these fee schedules. All fees paid by Insurance , together with the patient’s copayment, deductible and/or coinsurance (if applicable), are to be accepted as payment in full. Providers must not balance bill Members for in-network covered services. If providers fail to precertify services, they may not balance bill the Member.

Hospital Reimbursement — Insurance  will reimburse hospitals for services provided to Members at the rates established in the fee schedule or in schedule or attachment of the hospital contract. Payment rates shall include payment for all professional services by a providers covered by a hospital’s tax identification number or who have a principal practice location at the hospital’s address. All fees paid by Insurance , together with the patient’s copayment, deductible and/or coinsurance (if applicable), are to be accepted as payment in full.

Ancillary Facility Reimbursement — Insurance  will reimburse ancillary providers for services provided to Members at the rates established in the fee schedule or in attachment or schedule of the ancillary contract. Providers must not balance bill Members for in-network covered services. If providers fail to precertify services, they may not balance bill the Member


RETROSPECTIVE REIMBURSEMENT

▪ Provider sets the fee for service (FFS)
▪ Provider reimbursed after services are rendered
▪ Usual, Customary & Reasonable Charges (UCR)
▪ determined by payor (e.g. insurance company)
▪ reasonable amount charged by majority of providers
Discounted FFS:
▪ Predetermined percentage in reduction of charges e.g. 80%
▪ Fixed Fee Schedule: Establishes a payment for each type of service by CPT-4 Code


COST BASED REIMBURSEMENT 

▪ Reimbursed according to actual allowable costs
▪ Costs must be “reasonable” & related to patient care - includes administrative & overhead costs
▪ Medicare regulation 42CFR part 413
▪ Federally Qualified Health Centers (FQHCs)- Medicaid /Medicare providers entitled to 100% reasonable costs:
▪ 329s (Migrant Health Centers); 330s (Community Health Centers); 340s (Health Care for the Homeless); Tribal Organizations & “Look-A-Like” community based organizations

PROSPECTIVE 

▪ Reimbursement for services is established prior to the delivery of services
▪ Diagnostic Related Group (DRG)
* set fee for each diagnosis ▪ no limit on number or length of services
▪ Global Payment
▪ one inclusive rate for a “bundle” of services e.g. maternity
▪ All Inclusive Per Diem
▪ payment by type of hospital admission
▪ Capitation:

WHAT IS CAPITATION? 

▪ A method of payment for health services in which a provider is paid a fixed amount, usually monthly for each member served without regard to the actual number or nature of services provided to the member
▪ Capitation is:
▪ a means of payment for expected services
▪ a budgeting tool
▪ a management tool
▪ a control tool
▪ a belief system