Question: In what settings is UCR utilized? Do you think the patient should be informed by the type of reimbursement type ahead of time? Notes from class Overview of Reimbursement This week, you will review the most common reimbursement methods used to compensate providers, including physicians, hospitals, outpatient, and ancillary facilities. The most common forms of payment are FFS and capitation. FFS is often criticized because it is assumed that with higher fees and higher volume, physicians make more money. FFS is often blamed for problems with controlling the overall cost of care and encouraging waste and fraud in the healthcare system. FFS is considered a non-risk-based form of reimbursement because the payer (i.e. a Health maintenanace organization-HMO) is not sharing risk with the provider. FFS is most common among PPOs and traditional indemnity plans. Some examples of FFS include cost-based, charge-based, and prospective payment. Under cost-based reimbursement, the provider is reimbursed based on a predefined allowable costs. Payers pay billed charges to the provider under charge-based reimbursement. In a Prospective Payment System (PPS), payments are made based on categories: per procedure, per diagnosis, per diem, or by global pricing (Gapenski, 2003). Capitation is a risk-based payment method most commonly used by HMOs, where a gatekeeper system is required. Capitation is most commonly used for primary care physicians in HMOs. Physicians are prepaid on a per-member-per-month (PMPM) basis. As long as the patient is a member of the physician's patient panel, the physician will receive payment, whether services were used or not. Capitation allows health plans to more effectively predict costs and is less costly to administer, because there are fewer claims to review (Gapenski, 2003). Hospitals can only negotiate prices or contract with commercial or private insurers; Medicaid and Medicare set their own payments through the PPS, which is based on diagnosis-related groups (DRGs). A variety of methodologies may be used by the same payer. We will discuss these methodologies more under Hospital Reimbursement. Per Diems and DRGs are used only for inpatient care. Thus, these methods cannot be applied to ancillary and ambulatory care patients. As care has shifted out of the hospitals to ambulatory facilities, the cost of care in these facilities has also increased. There are two classification groups related to reimbursements in these settings—ambulatory patient groups (APGs) and ambulatory payment classifications (APCs). Question: In what settings is UCR utilized? Do you think the patient should be informed by the type of reimbursement type ahead of time? Notes from class Overview of Reimbursement This week, you will review the most common reimbursement methods used to compensate providers, including physicians, hospitals, outpatient, and ancillary facilities. The most common forms o f payment are FFS and capitation. ...

1. Question:
In what settings is UCR utilized? Do you think the patient
should be informed by the type of reimbursement type ahead of
time?
Notes from class
Overview of Reimbursement
This week, you will review the most common reimbursement
methods used to compensate providers, including physicians,
hospitals, outpatient, and ancillary facilities. The most common
forms of payment are FFS and capitation. FFS is often criticized
because it is assumed that with higher fees and higher volume,
physicians make more money. FFS is often blamed for problems
with controlling the overall cost of care and encouraging waste
and fraud in the healthcare system.
FFS is considered a non-risk-based form of reimbursement
because the payer (i.e. a Health maintenanace organization-
HMO) is not sharing risk with the provider. FFS is most
common among PPOs and traditional indemnity plans. Some
examples of FFS include cost-based, charge-based, and
prospective payment. Under cost-based reimbursement, the
provider is reimbursed based on a predefined allowable costs.
Payers pay billed charges to the provider under charge-based
reimbursement. In a Prospective Payment System (PPS),
payments are made based on categories: per procedure, per
diagnosis, per diem, or by global pricing (Gapenski, 2003).
Capitation is a risk-based payment method most commonly used

2. by HMOs, where a gatekeeper system is required. Capitation is
most commonly used for primary care physicians in HMOs.
Physicians are prepaid on a per-member-per-month (PMPM)
basis. As long as the patient is a member of the physician's
patient panel, the physician will receive payment, whether
services were used or not. Capitation allows health plans to
more effectively predict costs and is less costly to administer,
because there are fewer claims to review (Gapenski, 2003).
Hospitals can only negotiate prices or contract with commercial
or private insurers; Medicaid and Medicare set their own
payments through the PPS, which is based on diagnosis-related
groups (DRGs). A variety of methodologies may be used by the
same payer. We will discuss these methodologies more under
Hospital Reimbursement.
Per Diems and DRGs are used only for inpatient care. Thus,
these methods cannot be applied to ancillary and ambulatory
care patients. As care has shifted out of the hospitals to
ambulatory facilities, the cost of care in these facilities has also
increased. There are two classification groups related to
reimbursements in these settings—ambulatory patient groups
(APGs) and ambulatory payment classifications (APCs).
Question:
In what settings is UCR utilized? Do you think the patient
should be informed by the type of
reimbursement type ahead of time?
Notes from class

3. Overview of Reimbursement
This week, you will review the most common reimbursement
methods used to compensate providers, including
physicians, hospitals, outpatient, and ancillary facilities. The
most common forms o
f payment are FFS and capitation.
FFS is often criticized because it is assumed that with higher
fees and higher volume, physicians make more money. FFS
is often blamed for problems with controlling the overall cost of
care and encouraging waste and fraud
in the healthcare
system.
FFS is considered a non
-
risk
-
based form of reimbursement because the payer (i.e. a Health
maintenanace organization
-
HMO) is not sharing risk with the provider. FFS is most
common among PPOs and traditional indemnity plans. Some
ex
amples of FFS include cost
-
based, charge
-
based, and prospective payment. Under cost
-
based reimbursement, the
provider is reimbursed based on a predefined allowable costs.
Payers pay billed charges to the provider under charge
-
based reimbursement. In a Pros

4. pective Payment System (PPS), payments are made based on
categories: per procedure,
per diagnosis, per diem, or by global pricing (Gapenski, 2003).
Capitation is a risk
-
based payment method most commonly used by HMOs, where a
gatekeeper
system is required.
Capitation is most commonly used for primary care physicians
in HMOs. Physicians are prepaid on a per
-
member
-
per
-
month (PMPM) basis. As long as the patient is a member of the
physician's patient panel, the physician will receive
payment, whether services
were used or not. Capitation allows health plans to more
effectively predict costs and is less
costly to administer, because there are fewer claims to review
(Gapenski, 2003).
Hospitals can only negotiate prices or contract with commercial
or private insur
ers; Medicaid and Medicare set their own
payments through the PPS, which is based on diagnosis
-
related groups (DRGs). A variety of methodologies may be used
by the same payer. We will discuss these methodologies more
under
Hospital Reimbursement
.

5. Per Diems
and DRGs are used only for inpatient care. Thus, these methods
cannot be applied to ancillary and ambulatory
care patients. As care has shifted out of the hospitals to
ambulatory facilities, the cost of care in these facilities has al
so
increased. There a
re two classification groups related to reimbursements in these
settings
—
ambulatory patient groups
(APGs) and ambulatory payment classifications (APCs).