Healthcare Reimbursement and Quality of Care Research Paper

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Hospital administrators must take into consideration the role of reimbursement by health insurance companies when allocating finite resources and in assessing how patients will evaluate different treatment options. One of the most common examples of this is the rise of pay-for-performance incentives. “A pay-for-performance program provides a bonus to health care providers if they meet or exceed agreed-upon quality or performance measures, for example, reductions in hemoglobin A1c in diabetic patients” (“Pay For Performance,” 2012, par. 9). The underlying concept behind pay-for-performance is that rather than encouraging providers to offer more tests and treatments that may be unnecessary, providers are instead rewarded for patient improvement, including making diabetic patients less rather than more dependent upon medications.

Pay-for-performance is used to encourage wellness promotion and to encourage treating chronic conditions before they require expensive tertiary-level interventions. “For example, the Medicare program no longer pays hospitals to treat patients who acquire certain preventable conditions during their hospital stay, such as pressure sores or urinary tract infections associated with use of catheters” (“Pay For Performance,” 2012, par. 10). Hospitals must effectively pay for their own mistakes, under such revenue reimbursement structures, theoretically discouraging errors. While the advantage of pay-for-performance from the patient’s perspective is that more patients do not automatically generate more revenue, thus encouraging a manageable patient load, there are also concerns that certain types of patients, such as the very sickest or those on Medicaid or Medicare, may not be accepted due to a desire to create an impression of higher-quality care from a statistical perspective.

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In terms of reimbursement methods, fee-for-service models tend to be preferred by physicians, given that all methods of care are directly reimbursed, without concern as to type or patient population. Physicians believe that this straightforward model places the maximum trust in their expertise as providers (“What Payment Models Exist,” 2017). The trouble with such a model is that it encourages more rather than less utilization of services. From a macro level perspective, pay-for-performance might seem to be superior to keep costs down and to maintain high levels of quality. Other common models include episode-of-care payments, in which “bundled payments reimburse healthcare providers for specific episodes of care such as an inpatient hospital stay,” leaving only “a set amount of money to pay for the entire episode of care” (“What Payment Models Exist,” 2017, par. 4). Arguably, this may discourage provision of needed services. However, given that even if the patient might require more services, there are no available funds, concerns arise that rationing must be used by the institution, which can impact quality of care.

Another reimbursement method is partial or full capitation which actually actively discourages providers from offering care, “In this healthcare payment model, patients are assigned a per member per month (PMPM) payment based on their age, race, sex, lifestyle, medical history, and benefit design” (“What Payment Models….....

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