In a two page, double spaced document using references in APA Format: A fee schedule is a cost-based, fee for service reimbursement methodology. Distinguish some features of a cost based reimbursement methodology and a price based reimbursement methodology. Discuss how each methodology has contributed to an increase or decrease in the healthcare cost for patients.
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Introduction:
Fee schedules are critical in how healthcare costs are calculated and reimbursed. In healthcare, there are two dominant methods of reimbursement: cost-based and price-based. These two types of reimbursement have distinct features that are worth discussing. Understanding the differences between the two is important as these methodologies contribute to the overall cost of healthcare. In this document, we will outline the features of cost-based and price-based reimbursement methodologies, and discuss how each one has impacted the cost of healthcare for patients.
Features of cost-based reimbursement methodology:
Cost-based reimbursement methodology is a fee-for-service approach. This methodology is a retrospective payment method meaning that the healthcare provider determines the cost of each service or procedure after it has been delivered to the patient. Healthcare providers must track their costs meticulously to establish the appropriate reimbursement amount. The reimbursement amount is adjusted based on the provider’s allowable costs. The provider will then send their bill to the payer, who will review the claim and make necessary adjustments.
Features of price-based reimbursement methodology:
Price-based reimbursement methodology, on the other hand, has a predetermined reimbursement amount. This methodology is a prospective payment system, meaning that the healthcare provider will receive the same set price for a particular service or procedure, regardless of the actual cost incurred. In this case, the reimbursement amount is negotiated between the provider and the payer before the delivery of services.
How each methodology contributes to an increase or decrease in healthcare costs:
Cost-based reimbursement methodology incentivizes healthcare providers to offer more services and procedures to increase the cost base, which in turn increases their reimbursement amount. This method can result in providers inflating their fees to increase reimbursement and, as a result, the patient may end up paying more for the services.
Price-based reimbursement methodology, on the other hand, incentivizes healthcare providers to provide less costly services and procedures to remain within the predetermined payment amount. Providers may forego delivering certain services or may look for ways to reduce costs to ensure they remain profitable.
Conclusion:
In conclusion, although both reimbursement methodologies aim to provide fair payment to healthcare providers, cost-based reimbursement methodology may lead to increased costs for patients. On the other hand, price-based reimbursement methodology may result in reduced costs for patients but may also result in less delivery of services. Overall, each methodology has a unique approach and understanding these differences is crucial to determine the most effective way to deliver and reimburse healthcare services.
