A. The increased costs of health care services and the consumers’ demand for high quality and safe care have given rise to new methods of health care reimbursement. They have also made old ways of reimbursement either obsolete or more popular.

B. Changes in payment structures have taken place in almost every sector of the health care industry. However, the most dominant driver for these changes has been cost containment.

C. Reimbursement methodologies for health care services vary widely. They are determined by the reimbursement source/payer: PPS, managed care, capitation, fee for service, and so on.

D. Managed care encompasses a wide variety of terms and concepts, from the structure and purpose of the health care organization itself, to the tools used in a health care delivery system or insurance plan.

E. Government-based insurers/payers, such as Medicare and Medicaid benefit programs, often influence the processes used by managed care organizations and plans.

F. Benefit systems and reimbursement amounts are determined by payer source, which can be classified into two broad groups: commercial insurance and government payers.

G. Health care responsibility varies by state policies. For example, federal and state programs may assign responsibility for management of health care benefits to a third party—known as Managed Medicare or Managed Medicaid plans.

H. The case manager’s involvement with health care reimbursement, especially managed care, varies based on the degree and complexity of the:

A. Capitation—A set amount paid to a provider (individual or agency) on the basis of per member “per year” or “per month,” no matter what type of care/services is provided or not provided. Rates may vary widely with age and gender of members. Amount is predetermined and stipulated in a managed care contract between the insurer/payer and the health care provider (individual or agency).

B. Co-insurance—Percentage of allowed charges of a covered service for which a member in the health plan is responsible.

C. Commercial insurance—Payers that are not related to, or sponsored by, state or federal health insurance programs.

D. Co-pay—Predetermined dollar amount for which a member of a health plan is responsible each time a specific service is rendered (i.e., office visit, emergency department visit, prescription).

E. Deductible—Fixed amount of money a member in a health plan must pay each year before insurance benefits are paid by the insurance company. This is usually disbursed at the time the member accesses health care services.

F. Diagnosis related groups (DRGs)—The DRG system is a patient classification scheme that provides a means of relating the type of patient a hospital treats (i.e., the medical/clinical condition, acuity, and diagnosis) to the costs incurred by the hospital during care provision (i.e., resource utilization and intensity).

G. Gatekeeper—A primary care physician (usually a family practitioner, internist, pediatrician, or nurse practitioner) to whom a plan member is
assigned. Responsible for managing all referrals for specialty care and other covered services used by the member.

H. Government payers—Payers that are related to, or sponsored by, state or federal health insurance programs such as Medicare and Medicaid benefit programs.

I. Health care delivery system—A comprehensive model or structure used in the delivery of health care services to individuals—for example, integrated delivery system (IDS).

J. Health care reimbursement—Payment regarding health care and services provided by a physician, medical professional, or agency to individuals in need of such services.

K. Managed care—A system of health care delivery that aims to provide a generalized structure and focus when managing the use, access, cost, quality, and effectiveness of health care services. It links the patient to provider services.

L. Minimum data set (MDS)—The assessment tool used in skilled nursing facility settings to place a patient into a resource utilization group (RUG), which determines the facility’s reimbursement rate.

M. Network model—A group of physicians and related health care providers (may include health care facilities), contracted with a health insurance plan, from which a member should seek services. In this model, members have the option to go out of network for services. However, should the member select an out-of-network provider, out-of-pocket expenses may be higher than those incurred had the member remained within the network.

N. Out-of-pocket maximum—Maximum per calendar year for which a health plan member is responsible. Co-insurance, deductible, and co-pay payments accumulate toward this maximum.

O. Predictive modeling—A process used by managed care organizations to identify which of their members will have the highest future medical costs and will be in need of an increased amount of health care services. This tends to be based on clinical and demographic patient information and past expenditure.

P. Prospective payment system (PPS)—A health care payment system used by the federal government for reimbursing health care providers and agencies for medical care provided to individuals who belong to a governmental insurance plan.

Q. Re-insurance—Insurance to cover any losses incurred while covering claims that exceed a specified dollar threshold. This is most frequent with health maintenance organization (HMO) type plans.

A. There are several factors that impact the nature of the health care delivery system and its reimbursement structures.

B. As the health care industry continues to be dynamic and constantly changing, and innovations in diagnostics and therapeutics occur, the cost of health care services will continue to rise prompting necessary modifications in the reimbursement systems. Below are some important factors that affect such changes.

C. Commercial payers

D. Government payers

A. Commercial programs