MHA FPX 5006 Assessment 1 Financial Basics

Student Name

Capella University

MHA-FPX 5006 Health Care Finance and Reimbursement

Prof. Name

Date

Financial Basics

Revenue for healthcare providers is derived from various sources, each with distinct requirements and reimbursement procedures. Understanding these intricacies is vital for ensuring reimbursement and overall success. The primary revenue sources for providers encompass Medicaid, Medicare, and Managed Care coverages, each governed by specific rules dictating reimbursement, which impact the timing and method of payment for enrollees’ services. This presentation seeks to explore these revenue models, shedding light on their purposes and reimbursement mechanisms.

Medicaid

Established in 1965 under the Social Security Act, Medicaid offers health insurance for low-income individuals, including the disabled, children, and elderly in need of long-term care. Administered jointly by federal and state governments, Medicaid exhibits variations across states, resulting in coverage disparities. The Affordable Care Act broadened eligibility criteria, facilitating broader coverage and standardizing benefit rules. Medicaid’s reimbursement process is tailored to cover medical services for economically disadvantaged individuals, though it varies by state, posing challenges in comprehension and navigation.

Medicaid presents two primary payment models: fee-for-service and managed care. The fee-for-service model reimburses providers for individual services rendered, potentially incentivizing overutilization. Conversely, the managed care model prioritizes overall patient care, allocating a fixed payment regardless of services provided, with the aim of balancing quality and cost-effectiveness.

Medicare

Initiated in 1965, Medicare ensures healthcare access for individuals aged 65 and above, as well as those with specific disabilities. Managed by the Centers for Medicare and Medicaid Services (CMS), Medicare comprises Parts A, B, C, and D, each covering distinct services. Reimbursement under Medicare involves appropriately coding services according to each part’s requirements, with claims processed by Medicare Administrative Contractors (MACs). Reimbursement mechanisms differ among parts, influencing provider reimbursement and patient responsibility.

Managed Care

Managed care plans collaborate with providers to deliver cost-effective care, emphasizing patient wellness and preventive measures. Three common types include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Point of Service (POS) plans, varying in flexibility and cost-sharing.

Managed care reimbursement hinges on reducing unnecessary services and clear payment mechanisms outlined in contracts. Payment methodologies encompass risk-based payment, percentage of premium, global fees, capitation, and discounted fee-for-service, each impacting providers’ revenue streams and care delivery.

MHA FPX 5006 Assessment 1 Financial Basics

Conclusion

The revenue models discussed are pivotal for healthcare organizations’ financial sustainability and the quality of patient care. Understanding and navigating reimbursement processes ensure providers deliver optimal care while maintaining financial viability, thereby fostering long-term organizational resilience.

References

Centers for Medicare and Medicaid Services. (n.d.). Program History. Retrieved from Centers for Medicare and Medicaid Services

Hurley, R., & Retchin, S. (2006). Medicare and medicaid managed care: a tale of two trajectories. The American Journal of Managed Care.

Mandelbaum, B. (2015, September 30). Understanding medicaid reimbursement. Retrieved from McKnights Long-Term Care News

Matchinski, J. (2006, September). Managed care contracts and your practice. Retrieved from American Academy of Orthopedic Surgeons