Our goal in reimbursing providers is to provide affordable care for our members while encouraging quality care through best care practices and rewarding providers for meeting the needs of our members. Check with your individual provider if you wish to know the basis on which he or she is paid. Several different types of reimbursement arrangements are used with providers. All are designed to achieve that goal.
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Some providers are paid on a “fee-for-service” basis, which means that the health plan pays the provider a certain set amount that corresponds to each type of service furnished by the provider.
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Some providers are paid on a “discount” basis, which means that when a provider sends us a bill, we have negotiated a reduced rate on behalf of our members. We pay a predetermined percentage of the total bill for services.
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Sometimes we have “case rate” arrangements with providers, which means that for a selected set of services the provider receives a set fee, or a “case rate,” for services needed up to an agreed upon maximum amount of services for a designated period of time. Alternatively, we may pay a “case rate” to a provider for all of the selected set of services needed during an agreed upon period of time.
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Some providers — usually hospitals — are paid on the basis of the diagnosis that they are treating; in other words, they are paid a set fee to treat certain kinds of conditions. Sometimes we pay hospitals and other institutional providers a set fee, or “per diem,” according to the number of days the patient spent in the facility.
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Some providers — usually hospitals — are paid according to Ambulatory Payment Classifications (APCs) for outpatient services. This means that we have negotiated a payment level based on the resources and intensity of the services provided. In other words, hospitals are paid a set fee for certain kinds of services and that set fee is based on the resources utilized to provide that service.
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Occasionally our reimbursement arrangements with providers include some combination of the methods described above. For example, we may pay a case rate to a provider for a selected set of services needed during an agreed upon period of time, or for services needed up to an agreed upon maximum amount of services, and pay that same provider on a fee-for-service basis for services that are not provided within the time period or that exceed the maximum amount of services. In addition, although we may pay a provider, such as a medical clinic, using one type of reimbursement method, that clinic may pay its employed providers using another reimbursement method.
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To promote improvements in quality of care and efficiencies leading to cost effective care, we have developed “Shared Savings” programs with some provider groups (facilities and physicians), which share with the providers a portion of the realized care cost savings from improvements. These programs can be general in focus, measuring overall “expected” care costs against “actual” overall care cost, or more focused, addressing specific areas of care with specific goals on improvements. The goal of these programs is to benefit members through medical cost savings.