Healthcare Reimbursement and Quality of Care

Hospital administrators must take into consideration the role of reimbursement by health insurance companies when allocating finite resources and in assessing how patients will evaluate different treatment options. One of the most common examples of this is the rise of pay-for-performance incentives. “A pay-for-performance program provides a bonus to health care providers if they meet or exceed agreed-upon quality or performance measures, for example, reductions in hemoglobin A1c in diabetic patients” (“Pay For Performance,” 2012, par. 9). The underlying concept behind pay-for-performance is that rather than encouraging providers to offer more tests and treatments that may be unnecessary, providers are instead rewarded for patient improvement, including making diabetic patients less rather than more dependent upon medications.
Pay-for-performance is used to encourage wellness promotion and to encourage treating chronic conditions before they require expensive tertiary-level interventions. “For example, the Medicare program no longer pays hospitals to treat patients who acquire certain preventable conditions during their hospital stay, such as pressure sores or urinary tract infections associated with use of catheters” (“Pay For Performance,” 2012, par. 10). Hospitals must effectively pay for their own mistakes, under such revenue reimbursement structures, theoretically discouraging errors. While the advantage of pay-for-performance from the patient’s perspective is that more patients do not automatically generate more revenue, thus encouraging a manageable patient load, there are also concerns that certain types of patients, such as the very sickest or those on Medicaid or Medicare, may not be accepted due to a desire to create an impression of higher-quality care from a statistical perspective.
In terms of reimbursement methods, fee-for-service models tend to be preferred by physicians, given that all methods of care are directly reimbursed, without concern as to type or patient population. Physicians believe that this straightforward model places the maximum trust in their expertise as providers (“What Payment Models Exist,” 2017). The trouble with such a model is that it encourages more rather than less utilization of services. From a macro level perspective, pay-for-performance might seem to be superior to keep costs down and to maintain high levels of quality. Other common models include episode-of-care payments, in which “bundled payments reimburse healthcare providers for specific episodes of care such as an inpatient hospital stay,” leaving only “a set amount of money to pay for the entire episode of care” (“What Payment Models Exist,” 2017, par. 4). Arguably, this may discourage provision of needed services. However, given that even if the patient might require more services, there are no available funds, concerns arise that rationing must be used by the institution, which can impact quality of care.
Another reimbursement method is partial or full capitation which actually actively discourages providers from offering care, “In this healthcare payment model, patients are assigned a per member per month (PMPM) payment based on their age, race, sex, lifestyle, medical history, and benefit design” (“What Payment Models Exist,” 2017, par. 7). Once again, a major criticism of this method is that it discourages taking on certain kinds of sicker patients based upon the limited amount of payments offered to provide care, if the patient is likely to utilize more care than is allocated and the provider will have to ration what he or she considers appropriate treatment.
Regardless of the type of payment structure, the rise of patients with high-deductible health plans have resulted in greater difficulties for accounts receivable in collecting revenue from patients. Patients with high-deductible plans are often less financially solvent and the greater the proportion of the bill the patient must pay out-of-pocket, the higher the likelihood of patients defaulting (Reardon 2017). According to Reilly (2015), a study by the Kaiser Family Foundation found that 1 in 3 Americans struggles to pay medical bills, including Americans with health insurance.
Lower reimbursement rates from government healthcare programs such as Medicaid and Medicare can also result in discouraging institutions from accepting patients with these types of insurance plans; furthermore, since Medicaid is the state-based health insurance plan for those living below the poverty line just as Medicare is the federal insurance plan for Americans over the age of 65, the higher rate of patients with severe medical conditions from these populations acts as a further disincentive to accept patients using these methods of insurance.
The ultimate goal of healthcare organizations is to maximize revenue reimbursement. To do so requires input from cross-functional teams combining the input of financial and healthcare staff to determine how best to balance the need to provide quality care with net profitability. IT staff can provide input about the best way to monitor both revenue and results to speed up claims processing and to expedite following up with delinquent accounts. Creating standard operating procedures to minimize confusion with staff is also vital. For example, when there is ambiguity about coverage, this should ideally be dealt with immediately, versus after the patient has left the building; patients should also be adequately informed in layperson’s language about the extent of their responsibility and coverage. Persistence may be needed, given that it is estimated that 3.3 statements are required to get a patient to pay his or her healthcare balance in full (Riley 2015).
Finally, institutions can take proactive actions to reduce the likelihood that claims will be denied, thus reducing financial pressures both on patients as well as revenue collection departments. Financial triage means scanning patient records for errors and determining insurance company’s and patient responsibility before treatment (Riley 2015). Working with the patient to determine the best and most affordable plan given the reimbursement structure will result in the happiest scenario for all parties involved and may be as simple as determining whether a generic versus brand-name drug is carried by the patient’s plan.


References
Pay-for performance. (2012). Health Policy Briefs. Retrieved from:
http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=78
Reardon, S. (2015). What are the challenges of medical bill collection? Revcycle Intelligence.
Retrieved from: https://revcycleintelligence.com/news/what-are-the-challenges-of- medical-bill-collections
Riley, J. (2015). Maximizing reimbursement starts with patient access. HFMA. Retrieved from:
http://www.hfma.org/Content.aspx?id=27386
What payment models exist? (2017). McKesson. Retrieved from:
http://www.mckesson.com/population-health-management/resources/what-payment- models-exist/