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HITT217 Health Insurance and Reimbursement

Published : 03-Sep,2021  |  Views : 10


Discussion: Reimbursement for Services

There are a number of different options for determining how to charge for services provided at a health care organization. In the case-based service approach, one set fee covers an entire procedure. For example, if you needed knee replacement surgery, the fee would include preliminary visits, the surgery, and follow-up visits. However, in a fee-for-service approach, every different step would incur a separate cost. The reimbursement approach taken has significant ramifications for how care is provided.


Pricing is a vital aspect while offering a product. The price offer should accommodate all the expenses incurred and a profit margin for profit making organisations. Nonetheless, the price offered should consider the customer. In the case of goods, pricing is not as challenging as pricing a service. The health care industry has introduced different reimbursement models that consider the patient's needs and those of the provider. The case-based and the fee-for-services approaches are some of the pricing strategies used in this sector. This paper explores each method sighting the advantages and limitation as well as acknowledging the best pricing model.

The case-based approach consolidates the fee into one bundle that covers all the preliminary visits and post services. It is case-based since all visits should relate to a particular condition. The fee-for-services, on the other hand, charges for every service offered regardless of the situation. The first method eliminates fees for overlapping services thus making it cheaper for patients. However, this system demotivates physicians since despite the quantity of care the pay remains the same. The fee-for-service approach motivates physician since the payment is dependent on the number of services provided (Robinson, 2015). For the patient, this is a disadvantage as they pay for every service even for the same medical condition.

The approaches are similar since services are reimbursed. However, one is based on the patient’s condition and the other on the service provided. The fee-for-services allows patients to visit different physicians at any time. The case-based method limits patients to a single physician and appointments have to be made. A patient with cancer uses a case-based approach where preliminary visits, surgery, and chemotherapy are bundled into a single payment. Patients who visit doctors for different health problems use the fee-for-service method. This is because the conditions vary and different physicians may be involved (Langenbrunner, et al. 2014).        

Other reimbursement approaches are available that account for complications, high-value services and collaborated treatment. The warrantied payment ensures that doctors are accountable by minimising complications possible. Otherwise, they have to correct the problem without payment. The multi-physician bundled payment allows physicians to provide a complementary diagnosis. This is the case for rare and risky medical conditions. Additionally, the physician-facility method allows the medical provider to choose the most appropriate facility to deliver the service. The last payment approach does not apply in my medical facility. However, the former two are additional reimbursement procedures for complications and where many physicians are required to provide treatment (Hiller, & Marks, 2016).

 The payment approach utilised affects the nurse-to-patient ratio and the quality of services. The fee-for-service approach requires that one patient is attended to by more than one nurse depending on the medical conditions. Besides, physicians may lack efficiency and accountability thus necessitating the patient to make multiple hospital visits, an advantage to the doctor. However, since the patient pays for every service, it serves as an incentive for the doctor. The case-based payment method limits the ratio of nurse-to-patient to a possible minimum since payment is based on the patient’s condition. The quality of services is dependent on the state. Some diseases may require high-value payments for quality services (Simoens, & Giuffrida, 2013).

The healthcare sector has developed various methods for service reimbursement. These approaches have benefits and limitations to the physicians and patients. Patients want quality services at low prices. Doctors, on the other hand, are willing to offer quality services at high fees. Different payment methods are used to accommodate these contradicting preferences and ensure quality health care.


Hiller, H. D., & Marks, S. S. (2016). A guide to physician-focused alternative payment models.

American Medical Association and Center for Healthcare Quality and Payment Reform.

Langenbrunner, J., Cashin, C., & O'Dougherty, S. (Eds.). (2014). Designing and implementing

Health care provider payment systems: how-to manuals. World Bank Publications.

Robinson, J. C. (2015). Theory and practice in the design of physician payment incentives. TheMilbank Quarterly, 79(2), 149-177.

Simoens, S., & Giuffrida, A. (2013). The impact of physician payment methods on raising the

Efficiency of the healthcare system. Applied Health Economics and Health Policy, 3(1),39-46.     

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