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Health Reimbursement Methods: Their Pros and Cons

Identify the pros and cons of the following reimbursement methods:
Prospective-payment systems
Cost-reimbursement systems
Discounted-charge systems
Flat-rate reimbursement system

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Prospective payment systems:

1. Pros: Rates determined by payers are predetermined and not directly related to historical costs are charges. Under this system, the following units are evaluated to determine the rate: 1.) Per procedure- a payment is made per procedure instead of based on past historical charges/costs of the procedure, 2.) Per diagnosis- the more costly the diagnosis to treat, the higher the reimbursement rate, 3.) Per day- a flat rate is paid to the provider for each day he renders a service to a patient, 4.) Global reimbursement- one payment is paid for an entire procedure in such that the standard components of a service are included to be relevant and necessary and not need to be paid seperately

2. Cons: 1.) Per procedure: this method is associated with high administrative costs and is mainly used in outpatient settings; a past benchmark or measure for a procedure in terms of costs is not used and is instead based on necessity and frequency, 2.) Per diagnosis- diagnoses are ...

Solution Summary

Insurance methods within the healthcare system are evolving and offering both a pro and con for the doctor and the patient. This piece identifies the pros and cons of: Prospective-Payment Systems, Cost-Reimbursement Systems, Discounted-Charge Systems and Flat-Rate Reimbursement Systems.