Financial Management
Discussion on the Three Payment-Determination Basis.
The payment system describes the method by which the healthcare organizations such as Medicaid, Medicare, Commercial Health Plan and others determine the amount to be paid for a certain health program. The three payment determination bases are as follows:
Cost-payment basis
Fee schedule payment basis
Price related basis. (Cleverley, Cleverly, & Song, 2010).
A cost payment basis shows that provider's cost is the underlying method of payments and the rules to determine the costs are the contract between the healthcare provider and payer. For example, cost-payment basis is referred as the cost of provider's ratio multiply by total charges for specific healthcare claims. Payment for the claim reaching $1,000 charge is the 50% of $1,000, which is the cost ratio that providers charge and would be $500 payment, which is equivalent to 50% times $1,000
A fee schedule is the actual payment that is predetermined and unrelated to either provider's actual price or provider's actual costs. For example, Medicare payment for a patient in the hospital for the Reattachment of Lower Extremity or Major Joint Replacement has a predetermined payment such as $14,500. The actual charge or the costs are not relevant once DRG assignment has been carried out. Thus, physician's payment on the service is the fee schedules and the fee schedules are negotiated and are accepted since providers are participating in Medicaid and Medicare.
A price related basis is the payment system where the providers are paid for the services delivered based on the total charge for service delivered to patients. A payer may negotiate for the 75% billed charge with healthcare provider and there could be a total charge of $7,500, which is 75% of $10,000.
While the report discusses the different payment method, there are still other payment services called bundle services and specific services. Thus, the report provides difference between bundle services and specific services.
Differences between Specific Services and Bundle Services
Payment Basis
Difference between Specific services and Bundled services
Unit of Payment
Cost
Fee Schedule
Price Related
Specific services
High-cost of drugs...
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