Session 6
Read Chapter 6: Financing and Reimbursement Methods
This chapter is an essential outline of the philosophical difference in providing care for an electorate vs. the compared to the focus on a population’s health in other countries.
OBJECTIVES: Students will describe:
- A) financing and various insurance programs.
- B) the various methods of reimbursement.
- an overview of national health expenditures.
Review this slide show
Terms you should know:
- Balance bill: The practice of billing the patient for the difference between the provider’s actual charges and the amounts paid by third parties.
- Beneficiary: A participant in a health insurance plan. Also called the insured or enrollee.
- Benefit period: For Medicare coverage, a benefit period is determined by a spell of illness beginning with hospitalization and ending when a beneficiary has not been an inpatient in a hospital or a skilled nursing facility for 60 consecutive days.
- Bundled charges (package pricing): Set fees that include all related services.
- Capitation: A method of reimbursement used by HMOs in which the provider is paid a set monthly fee per enrollee and is required to provide all needed services within the set amount.
- Case mix is the overall acuity level in a facility as determined by the severity of the patients’ condition.
- Coinsurance is the proportion of cost sharing between the insurance plan and the insured.
- Consumer price index (CPI) measures inflation in the general economy.
- Co-payment is the amount that the insured must pay out of pocket each time health services are received after the deductible amount has been paid.
- Cost sharing: Sharing of costs between the insured and the financier or insurer.
- Deductible is the amount the insured must first pay before any benefits are paid by insurance.
- Enrollee: A participant in a health insurance plan. Also called the insured.
- Financing refers to any mechanism that gives people the ability to pay for health care services.
- Gross domestic product (GDP) measures the total value of goods and services produced and consumed.
- Insured: An individual protected by insurance.
- Means-tested program: A public program in which eligibility is determined by a person’s level of income.
- Medigap is a private insurance policy purchased by many of the elderly to pay for expenses not covered by Medicare.
- Moral hazard is consumer behavior that leads to a higher utilization of health care services when the services are covered by insurance.
- Per diem is a daily rate of reimbursement.
- Premium is the amount charged for insurance coverage.
- Prospective reimbursement uses certain preestablished criteria to determine in advance the amount of reimbursement.
- Provider-induced demand: Providers’ ability to create demand for services that are financed through insurance.
- Reinsurance is a mechanism whereby an insurer can cover high-risk losses through insurance from another insurer. For example, self-insured employers generally protect themselves against the risk of high losses by purchasing reinsurance from a private insurance company.
- Retrospective reimbursement is a payment method in which rates are set on the basis of costs already incurred.
- Risk: The possibility of a substantial financial loss from some event.
- Stop loss is the maximum out-of-pocket liability that an insured would incur in a given year.
- Third-party payers are insurance companies, Blue Cross/Blue Shield, and the government (for Medicare and Medicaid) who make payment for claims on behalf of the insured.
- Underwriting is a systematic technique for evaluating, selecting, classifying, and rating risks.
After this set of readings and slides you should be able to write a short essay (no more than 200 words) on any of the follwing topics.
- Why are managed care plans regarded as health insurance? How do managed care plans defer from traditional insurance?
- Discuss the financing, eligibility, and covered services for the Medicaid program
- Discuss the payment method and risk sharing under capitation
To test yourself you may wish to place a short essay on any of these topics on the Discussion Forum for review and comment by your peers.