Fee-for-service is a method of payment where the provider is paid a fee for each procedure performed and billed.Most payer fee schedules are based on CPT and HCPCS Level II codes
Global reimbursement is a method of payment where the provider is paid one fee for a service that consists of multiple procedure codes that are rendered on the same date of service or over a span of time rather than paid individually for each procedure code. If a provider bills for several individual procedure codes that are covered under a global procedure code, which is referred to as “unbundling,” Medicaid
Program Integrity will audit the provider’s billing.
Cost-based reimbursement, which is sometimes referred to as a per diem rate or an encounter rate, is based on the provider’s actual costs for rendering services to Medicaid recipients. Providers who are reimbursed on a cost basis are: hospitals, county health department clinics, federally qualified health centers, hospices, intermediate care facilities for the developmentally disabled, nursing facilities, rural health clinics, and state mental hospitals.
Health maintenance organizations (HMOs) and certain other providers are prepaid a fixed amount each month for each recipient (per capita) who is enrolled to receive services from that HMO or provider.
Capitation payments are advance payments made to healthcare providers by a health insurance company. Typically, this approach calls for determining a fixed amount that is tendered to the provider on a monthly basis, with that amount subject to review on an annual or other regular basis. A health maintenance organization or HMO is one of the most common types of group health insurance plans that utilize this approach to reimbursing physicians for services rendered.
The idea behind capitation payments is to ensure that members of the healthcare plan have ready access to physicians when and as the need arises. At the same time, the physicians who participate in the arrangement have the benefit of knowing they will have at least a minimum amount of income for each calendar month. A third advantage to this approach is the ability to cap medical expenses, which in theory aids in preventing those costs from increasing at a pace that is ahead of the economy
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