Question.1127 - Option #1: Managed Care Payment Mechanisms - Paper Submit a paper that explores the three primary payment mechanisms used by managed care. For each, discuss how risk is spread between the patient, provider, and managed care organization. Be certain to explore the strengths and weaknesses of each payment mechanism. Your paper should be: Two to three pages in length (not including the title and reference page) Conform to guidelines in the CSU Global Writing Center. Include at least a minimum of two credible references. The CSU Global Library is a good place to find these references. The CSU Global Library and Writing Center links can be found in the course navigation panel.
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Module 6: Critical Thinking Mohammed Fawzi Colorado State University Global HCM 5001 Thomas Clobes November 20, 2023 Option #1: Managed Care Payment Mechanisms Introduction Managed care firms regulate their relationships with insurance companies through various payment schemes. In the healthcare industry, these preparations are crucial. This essay examines the three primary pricing bureaucracies commonly used in managed care: capitation, rate-for-carrier, and bundled bills. The leading players in this process—patients, businesses, and managed care organizations—are all carefully assigned and administered financial threats through those systems. The next studies will elucidate the distinctive characteristics of each mechanism and shed light on the distribution of risk in these frameworks. This essay will examine the benefits and drawbacks of capitation, charge-for-provider, and bundled payments (Nugent, 2010) to assist readers in making informed decisions regarding the suddenly changing international healthcare shipping and reimbursement. Capitation Capitation is a special type of payment system used in managed care that entails paying healthcare professionals a fixed amount per patient for a certain amount of time, regardless of the number of services rendered. This novel payment model describes a risk-sharing agreement between patients, doctors, and managed care organisations. The patient takes on the risk of needing more services than planned and incurring more out-of-pocket costs for treatment. However, within the pre-established financial limits, providers take on the duty of effectively managing the health of their patients. In addition, managed care organizations must contend with the possibility of unanticipated increases in healthcare utilization among their capitated members, which means striking a careful balance between controlling costs and providing high-quality treatment. The complicated way capitation divides up risk shows its pros and cons when looking at managed care payment plans (Opoku et al., 2022). Strengths Promotes preventative care: To lower the need for expensive treatments, providers are compelled to concentrate on preventive measures. Cost predictability: Because managed care organizations know the fixed cost per member, they gain from predictable budgeting. Weaknesses Restricted access to services: If providers try to keep costs under the fixed payment, patients might only have limited access to some treatments. Undertreatment incentive: Providers could be incentivized to reduce services to maximize revenues. Fee-for-Service One standard payment model used in managed care is called "fee-for-service," which pays healthcare professionals for each service they give. This payment model creates a unique risk allocation dynamic among patients, providers, and managed care organizations. Patients may be more vulnerable to higher out-of-pocket costs, such as copayments or deductibles associated with the wide range of services used. On the other hand, if the amount of services provided declines, providers take on the financial risk related to possible instability. In addition, because fee-for-service models have an intrinsic tendency to increase total spending, managed care organizations must contend with the general risk of rising healthcare costs. Thus, the fee-for-service model captures a complex interaction between risk-sharing, with advantages and disadvantages within the complex field of managed care payment models (Nugent, 2010). Strengths Patient choice: Patients can select from a wide range of treatments without regard to cost. Reimbursement to providers: By paying for each service rendered, providers maintain their financial security. Weaknesses Cost unpredictability: Unpredictable costs are a problem for managed care organizations because they pay providers according to the services rendered. Overutilization: To get paid as much as possible, providers could be enticed to provide needless services. Bundled Payments Bundled payments offer a unique approach in the managed care payment landscape by combining all services associated with a particular episode of care into a single payment. This novel approach reorganizes the financial risk among providers, patients, and managed care companies. Patients are exposed to the possibility of incurring additional costs should their care exceed the agreed-upon bundled sum, requiring some financial responsibility. On the other hand, providers are responsible for carefully managing costs within the limits of the bundled payment structure, which requires all participating services to work together and be effective. Managed care organisations may also lose money and need help predicting how people will use their services, which shows how flexible risk-sharing is in bundled payment models (Opoku et al., 2022). Strengths Care coordination: Providers are incentivized to coordinate care efficiently to remain within the bundled payment. Cost containment: By offering a set fee for each episode of care, managed care organizations can reduce costs. Weaknesses Restricted flexibility: The ability of providers to tailor care to each patient's specific needs may be restricted. Quality issues: There may be worries that care quality will be lowered to reduce expenses. Conclusion In conclusion, managed care organizations utilize various payment methods, each exhibiting unique strategies for allocating financial risk. Patients and managed care organizations confront distinct aspects of risk associated with service utilization. Still, providers are under pressure to manage health effectively within budgetary limits under capitation, which has a fixed per-patient payment structure. The traditional fee-for-service payment model, which rewards clinicians for each service rendered, puts patients at risk of out-of-pocket expenses and providers at risk of unstable finances as managed care organizations struggle with growing overall costs. Bundled payments distribute risk among patients, providers, and organizations while streamlining financial arrangements for a particular episode of care. Every approach has advantages and disadvantages, highlighting how difficult it is to balance financial obligations in the managed care environment. It is essential to comprehend these nuances to promote long-lasting and efficient healthcare delivery methods. References Nugent, M. E. (2010). Managed care contracting and payment reform, avoiding a showdown. Healthcare Financial Management, 64(7), 36-40. Managed care contracting and payment reform, avoiding a showdown - Document - Gale Academic OneFile Opoku, S. T., Apenteng, B. A., Kimsey, L., Peden, A., & Owens, C. (2022). COVID-19 and social determinants of health: Medicaid managed care organizations' experiences addressing member social needs. Plos one, 17(3), e0264940. https://doi.org/10.1371/journal.pone.0264940More Articles From Medicine
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