HealthcareReimbursement Systems

Healthcarereimbursement system is a mechanism for which compensation isacquired for any service. New rules and payment methods make thesystems of healthcare reimbursement complex. The systems depend onpatients who have health insurance, which is a typical course formost people nowadays. Insurance companies cover medical expenses forpatients by assuming risks in healthcare costs which are unknown tothe patients themselves. Different methods of reimbursement aredefined by the extent to which an individual involves risksfinancially, time orientation, and the entity of payment (Casto,Forrestal &amp AHIM, 2013). The object of payment can either beblock payment or payment for every service. Time adjustment can beprospective or retrospective. The two primary systems of healthcarereimbursement discussed are the episode-of-care system of payment andfee-for-service reimbursement.

Fee-for-servicereimbursement system (FSF)

Thissystem necessitates patients to compensate the provider for healthcare for the performed services. It is a traditional model that doesnot require an incentive to devise strategies of preventive care,prevent patients from being hospitalized, or to engage in any othermeasures that are cost saving (Harrington, 2016). Fee-for-serviceheightens costs for health care as it is inflationary. The systemcreates a situation where the patients` impartiality is messed upwith by the possible clash between their self-interest in overutilizing the services they paid for and the interests of theinsurance company. Physicians do not receive an incentive to denypatients the services with this type of model. Doctors and patientsdon`t get to consider how much it costs to treat a patient when aninsurance company caters for medical bills. This system favorspatients because when they are insulated from the expenses, they haveaccess to any medical services necessary.

Uncertaintyis the main loophole of FSF. Patients receive unknown health careservices which translate into an uncertain cost of reimbursement forthe health care providers. Prices heighten with an increase in theservice fee, when more than the required services are rendered, andin cases where less expensive medical procedures have to besubstituted with more expensive ones. Managed care, self-pay, andretrospective payment are examples of FSF system (Casto, Forrestal &ampAHIM, 2013). Patients overusing the services more than they paid foris a disadvantage for the system.

Coordinatedcare is a challenge in the fee-for-service system. Only individualclinicians benefit from it for rendering other treatments. FSF is themost common payment model for patients and doctors in the UnitedStates. When physicians fail to get paid for a service at times, theybecome discouraged to attend to the patients whose bills are paid byinsurance companies with the availability of other options that arebillable. It is also common that while evaluating medical data liketest results from the laboratory or scans during a patient diagnosis,a specialist will not see the patient in person but will instead makethe quality of care better while lowering costs.

Episode-of-CareReimbursement system

Thishealthcare means that nurses get much money for every service theydeliver about a disease. The mode of payment is the episode which isthe standard paying unit. The episode-of-care model does away withindividual payments and charges. It is an improvement of the faultsperceived in the FSF method. This process puts costs on a much moresystematic scale (Reid, 2009). It promotes proficiency and improveshealth care quality because the amount payable for a whole episode isalready pre-set.

Inthe episode-of-care system, there is an evident increase incoordination and a potential improvement in care quality as it dauntscare that is unnecessary. This system of reimbursement hardlypenalizes providers for taking care of patients who are sicker. It isbeneficial to both patients and doctors as it eliminates redundancyfrom protocols of caring for patients such as failing to provideadequate postoperative services. Consumers of this service experienceultimate transparency by fixing payments and cost and resulting datapublishing. Real data makes it easier for patients to determine whichservice provider to opt for compared to just words. Economies ofscale may result from such bundled modes of payment for instance ifthe providers decide to use an individual product (Reid, 2009). Whilethe extent of improved services varies with the procedures and it`shard to quantify in advance, it is unbeatable that when the focusshifts to the cumulative outcome of contributions by each person willenhance performance in the health system. Conclusion

Thereare many methods available for reimbursing physicians and hospitalsfor providing healthcare to patients. The most commonly availablesystem is the FSF but the system that serves the interests of bothtaxpayers and providers, as the stakeholders in the program, is theepisode-of-care reimbursement system. Despite having loopholes, it isthe ultimate tool that can cause alignment between providers and thetaxpayers. The alignment can eradicate inadvertent financialincentives that make care ineffective and fractured. With that, theconsumer can choose and discover the options that are morecost-effective and of high quality.


Casto,A. B., Forrestal, E., &amp American Health Information ManagementAssociation. (2013). Principlesof healthcare reimbursement.Chicago, Ill: American Health Information Management Association

Harrington,M. K. (2016). Healthcare finance and the mechanics of insurance and reimbursement

Reid,T. R. (2009). Thehealing of America: A global quest for better, cheaper, and fairerhealth care.New York: Penguin Press