Speak in first person? In your response posts to at least two other peers’ initial posts, address the following: Identify one advantage from your peer’s post that is dif

Lisa Discussion:

The reimbursement rates provided by private insurance are often far more significant than those offered by government-supported programs. Lopez et al. (2020) state that private insurance pays between 141% and 259% of Medicare's reimbursement rates for hospital treatments. One reason is that private insurers are better positioned to bargain for lower prices with their suppliers. This results in a pay disparity between commercial insurance and government-financed healthcare sectors. The average percentage of Medicare physician service costs covered by private insurance was 143%. However, this figure ranged from 118% to 179%. The same is true for hospitals and clinics. Hospitals treating patients with private insurance will also receive higher reimbursement rates. The gap may hurt hospitals and other healthcare institutions because private insurance often provides higher reimbursements than public healthcare systems.

In most cases, private insurance firms' superior reimbursement rates are passed on to plan members through higher premiums. As a result of these higher reimbursement rates, however, private insurance firms are in a better position to give better treatment to their consumers (Lopez et al., 2020). In addition, private insurance can provide access to higher-quality care and more specialized doctors than government-supported insurance. Many Medicaid patients have trouble finding doctors since Medicaid only pays at a severely reduced rate.

From the perspective of a healthcare administrator, private insurance reimbursement rates enable a more excellent quality of treatment to be delivered to members. Private insurance reimbursement rates are typically more substantial than government-supported insurance, which may impact the healthcare organization's bottom line(Askin & Moore, 2022). Insurance supported by the government sometimes has cheaper administrative expenses than private insurance. However, compared to when they see patients with private insurance, physicians are less likely to be appropriately compensated, and the quality of care is more likely to decrease.

References

Lopez, E., Neuman, T., Jacobson, G., & Levitt, L. (2020). How much more than Medicare do private insurers pay? A review of the literature. Kaiser Family Foundation, 15.  http://elmcgroup.com/sequoia/wp-content/uploads/2020/05/How-Much-More-Than-Medicare-Do-Private-Insurers-Pay_-A-Review-of-the-Literature-_-KFF.pdf

Askin, E. T., & Moore, N. (2022). The health care handbook: a clear and concise guide to the United States health care system. Lippincott Williams & Wilkins.  https://books.google.com/books?hl=en&lr=&id=KamgEAAAQBAJ&oi=fnd&pg=PT24&dq=Private+insurance+reimbursement+rates+are+typically+more+substantial+than+government-supported+insurance,+which+may+impact+the+healthcare+organization%27s+bottom+line.&ots=GWBHBSZXoJ&sig=P9HCuA1yZon5JF6ASfYWwvCH2Vs#v=onepage&q&f=false

Jana Discussion

         For healthcare institutions to be financially profitable, they must have processes in place to maximize reimbursement rates.  Even non-profit organizations depend on private insurance, federal, state, and individual reimbursement to stay afloat.  Private insurance providers reimburse at differing rates than federally supported carriers (Gorman, 2020).  Medicare, a federally sponsored insurance program, typically pays a flat, prospective fee for each Medical Severity Diagnosis Related Group (MS-DRG).  However, private insurance carriers negotiate with physicians and healthcare organizations about rates of reimbursement.  These private insurance carriers utilize many techniques to negotiate, including prospective or retrospective payments, paying percentages of listed prices, or paying specific amounts based on listed prices (Gorman, 2020).  On average, private insurance carriers reimburse 37 percent higher than traditional Medicare rates and larger insurance companies tend to receive more discounted rates for services.

            Advantages of prospective reimbursement, typically utilized by federally sponsored programs, is that physicians and organizations are incentivized to provide cost-effective care, as more care does not equal increased payment (Casto & White, 2021).  Another advantage is that insurers know exactly how much money will be spent for each service and providers who are able to streamline processes can profit from efficient care that costs less than what they are paid (Casto & White, 2021).  Disadvantages of the prospective payment systems are that providers and organizations assume financial risks based on some patients whose severity requires more extensive treatment than for what third-party payers will reimburse (Pott et al., 2023).  Prospective payments have led hospitals to discharge patients earlier than appropriate or omit some treatments to save money.  Additionally, some organizations may compete to attract healthier patients that require less care and may opt out of treating patient populations known to be unhealthier (Pott et al., 2023).

            Private insurance carriers are more likely to reimburse physicians and healthcare organizations through retroactive payment systems.  Retroactive payments are advantageous because they allow providers to treat patients individually and tailor care to the services they need, not based on cost-saving treatment options (Casto & White, 2021).  Also, providers are more likely to work with insurance companies that pay retrospectively since there are fewer administrative hurdles for this payment system.  A disadvantage of this form of payment is that providers can abuse the system, increasing the number of services provided to increase reimbursement rates (Casto & White, 2021).  Providers also cannot guarantee what amount of reimbursement they will be provided and are subject to dealing with claim denials if insurance carriers do not approve of treatments provided.  This increases administrative costs for the organization. 

            It is likely that throughout the course of a healthcare organization’s lifespan, it will have to deal with both private and federal third-party payers.  Understanding payment methodologies will increase reimbursement rates and reduce the administrative burden of revenue cycle management processes.

References

Casto, A. B., & White, S.  (2021).   Principles of healthcare reimbursement and revenue cycle management.  American Health Information Management Association. 

Gorman, L.  (2020).  Variation in public and private insurers’ hospital reimbursements.   The NBER Digest.   https://www.nber.org/digest/sep20/variation-public-and-private-insurers-hospital-reimbursements

Pott, C., Stargardt, T., & Frey, S.  (2023).  Does prospective payment influence quality of care?  A systematic review of the literature.   Social Science and Medicine, 323, 1-15.   https://doi.org/10.1016/j.socscimed.2023.115812

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