Charge-Based Reimbursement Analysis

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Conventional wisdom has it that the purpose that finance plays in a health care system includes the accounting and other financial management functions. The tasks involve planning for, obtaining, and using supplies to reach the highest value while reducing costs, according to Gapenski (2013). Some examples of activities of a finance department can include managing financial operations, making sound financial decisions, strategically deciding on capital investments, reviewing and reporting financials to upper management, and continually analyzing the financial and operational data to confirm that goals are within boundaries (Gapenski, 2013). Furthermore, the healthcare system relies on finance to record all monies and transactions, looks to …show more content…
The fee-for-service methods are further categorized into cost-based, charge based, and prospective payments. The cost-based method of reimbursement is described as the agreed upon amount paid to the provider based on the amount of care given to the patient (Gapenski, 2013). Charge-based reimbursement is based on amounts set by the provider and paid according to the chargemaster, as stated by Gapenski (2013). A discount is often offered for many uninsured and self-pay patients or they are not required to pay at all. The prospective payment entails the establishment of costs prior to services being provided. A typical form of payment used in this system is the per-procedure reimbursement, where based on coding, the provider receives a payment for each procedure that is executed on the patient (Gapenski, 2013). The per diagnosis form of payment is the reimbursement rate based on the coding of each diagnosis of the patient (Gapenski, 2013). Per diem is the method of payment indicate that providers are reimbursed for services a fixed amount for each day, however, the amounts could vary depending on days of specialists (Gapenski, 2013). Lastly, bundled reimbursements entail a single reimbursement amount for all services, however, it usually includes multiple providers (Gapenski, 2013). Capitation is the other form of reimbursement most often used by the managed care organizations. The providers are paid a fixed amount per member per month in spite of any services that the provider furnishes (Teitelbaum & Wilensky, 2013). These payments are based on documentation gathered from patient charts and posted to a claim by a coder for proper
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