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Community Connections for Health Care Part III of IV
COMMUNITY CONNECTIONS FOR HEALTH CARE - Part III of IV
Reimbursement for Health Care Services
The reimbursement system for health care in the United States is designed primarily to pay for treatment of illness. Preventive services for acute disease or management of chronic conditions have limited financial support. The system is based on eligibility of an individual client to receive necessary services from selected providers. The eligibility criteria may relate to the financial status of the individual or to existing health status. Charges for health care services are based on many on past costs of the provider. Reimbursement for health care services is a very complex system and the plans may change annually. This is a general and very brief description.
Types of reimbursement for health services include private insurance plans, Federal government insurance programs, and private payments by the individual. The reimbursement plan may require the insured to pay a deductible or co-pay for services used.
Private health insurance has many variations. Insurance premiums may be paid the individual, the employer, or the government. Premium rates are based on the experience of the insured population, which means different groups may have different premiums for the same level of service with the same providers. For example, a group of young (healthy) people will pay a lower premium than a group of older (chronic conditions) people for the same level of coverage, anticipating different rates of usage. Health insurance plans are regulated by State government.
Government insurance programs include Medicare and Medicaid; population based government programs, such as the Veterans Administration (VA) and Indian Health Services (IHS); and Public Health Services.
*Medicare is a Federal insurance program for individuals qualified by age and/or disability who have contributed to the program. Medicare makes payment for covered services to participating providers.
*Medicaid is a Federal/State insurance program for persons who are qualified by income, age, disability, and/or family status. Medicaid makes payment for covered services to participating providers.
*Population-based Federal insurance programs cover persons who are qualified by definition and will make payment for specific covered services to specific participating providers.
*Public Health Services in general are population-based and include many services including targeted vaccination programs, health education, water testing, restaurant inspections, etc.
Private self-pay status of the client may result from a personal client decision or from lack of coverage by any other reimbursement system. Free care may be offered to some clients by some providers.
Understanding the terminology
Insurance - a system of financial protection for an individual against potential defined risks for which someone pays a premium into a pool from which defined payments will be paid under defined conditions to defined providers.
Premium - the amount paid to the insurance company for the client for the selected level of service
Deductible – the contracted dollar amount to be paid by the insured before payment is made by the paying agency.
Co-pay – the contracted dollar or percentage amount of the total charge to be paid by the insured in addition to the remaining payment made by the paying agency.
Insured – the person for whom premiums have been paid.
Covered Services – specific health and medical services that are defined by the insuring entity as payable for the insured.
Participating Provider – those qualified providers who have an agreement with the paying agency for certain services under certain conditions for the insured.
Qualified providers – those providers who are licensed or certified and in good standing within a defined legal jurisdiction.
Health care costs in the United States for 2014 were $9,523 per person [17.5% of the Gross Domestic Product (GDP)]. In spite of this high cost, our health outcomes show less success than those in some of the European countries. Possible causes for this disparity are the emphasis on illness rather than wellness, the complexity of the health care system, and the relaxed attitude most Americans have toward personal responsibility for good health habits.
Next time we’ll discuss how health care providers can make a positive difference in the cost of health care and, more importantly, in the health outcomes for each client.
About the Author
Joan Bachman is a Registered Nurse, Licensed Nursing Home Administrator, Registered Health Information Technician, and Faith Community Nurse. She earned a Bachelor of Science degree in Business Administration. Joan has experience as a Nurse, Administrator, Developer, Trainer, Grant Writer, and served as Administrator of SD State Survey Agency. She has consulted with health care facilities and nonprofit organizations and presented leadership training. Joan is the author of Guidebook for Assisted Living Facilities and Senior Service Providers and Guidebook for Physician Services in the Nursing Facility, and she has published in professional journals.
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