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Fee-for-Services and Managed Care Organizations

1. Compare and contrast payment methodologies between FFS and MCO plans.

2. Problems that MCOs have experienced when implementing capitation arrangements in specialty care practices.

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FFS or fee for service is a payment system in which the health insurance either pays the provider directly or reimburse the insurer for each service received or 'covered' medical expense incurred based on the usual and customary fees charged in the local area (BCBS, 2010). A few words in this statement are key to understand how it works.
First, it is a payment for services after they have been incurred. Second, the services must be covered by the health insurance, which means that only those authorized by the insurance will be reimbursed. With the non-covered services generally the patient has two options: (a) either the client/patient does not receive the service, or (b) the patient has to pay the provider of services directly for the full cost the services. And the third key element is that the insurance pays based on usual and customary fee charges in the local area. This means that the insurance has set certain amount according to the area that is usually based on a benchmark established by what Medicare and other insurances pay for the same services. A provider in New York bills for the same service as a provider in Arizona to the same insurance. The provider in New York will get a higher reimbursement than the provider ...

Solution Summary

The solution includes a discussion on the payments methods of a Fee-for-Service (FFS) and the Managed Care Organizations (MCO) plans (with an hypothetical payment comparison between the plans) and the difficulty on implementing capitated payments in speciality care. This solution is 770 words with three references.

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