MHA5006_Banta_Lucresha_Assessment 1-1
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Dec 6, 2023
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Uploaded by ChancellorCapybara3440
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Financial Basics
Health Care Finance and Reimbursement
Lucresha Banta
October 2023
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Medicaid Program
Purpose
Medicaid is a joint federal and state program that covers the medical costs for low-
income people, pregnant women, children under 19 years old, people with handicaps, and adults
with financially reliant children. This program will vary from state to state, as the program is run
at the state level but must follow general federal rules that have been set up. Medicaid will pay
Medicare Part B premiums; it may help pay for Medicare deductibles, coinsurance, and
copayments, Part A premiums, and help cover the costs of medications. The amount of coverage
is based on the level of income. States cover at or below 138% of the federal poverty level.
Reimbursement
Reimbursement for Medicaid services is typically paid as a fee-for-service payment.
There is a movement towards a managed care payment model in which care focuses on the
whole patient instead of each illness or condition. Under the managed care model, states are paid
a monthly capitation payment. Medicaid reimbursement goes directly to the provider.
In the fee-for-service model, payments are based on itemized charges. This means that
the providers can send beneficiaries for tests that may not be necessary and still get paid. In the
managed care model, the payment is the same regardless of the services provided. The states
prefer the managed care model as it is a flat fee and can reduce costs. This method also puts
financial risks on the providers to provide appropriate care. From the patient's point of view, this
system decreased the number of providers willing to provide services, making it more difficult to
find providers.
Providers have twelve months to submit a claim. Medicaid is required to pay individual
providers within 30 days of receipt of a clean claim.
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Benefits
Medicaid allows low-income people to receive health care services at little to no cost. If
the patient also has Medicare, Medicaid will cover the cost of Medicare deductibles, coinsurance,
or copayments. Beneficiaries will pay no more than the amount set for services furnished by
Medicare providers.
Providers can obtain an extensive patient base by accepting Medicaid patients. Providers
can expect a large patient base if a practice opens in a low-income area. For new providers,
Medicaid patients can help build up a practice.
Medicare Program
Purpose
Medicare is federal health insurance for those people 65 years of age or older or for
specific disabilities or conditions. Medicare is managed at the federal level, and coverage will be
the same regardless of where the patient lives. Medicare insurance covers hospital admissions
under the Part A benefit. Part B benefits include medical insurance costs, including lab work,
doctor visits, home health services, and outpatient hospital care. There can be a fee for these
services, typically 20%.
Reimbursement
Medicare reimbursement is paid directly to the provider. The provider will send the claim
to Medicare. Beneficiaries may have a deductible, coinsurance, or copay to pay.
Medicare
reimbursement takes approximately 60 days to process and review a claim. Once the claim is
approved, it will be paid in about 30 days. Medicare is paid on a fee-for-service basis.
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Benefits
Medicare pays for medically necessary and preventive care for beneficiaries. There is no
limit on the number of times a patient can see their doctor. Medicare pays for hospitalizations,
post-acute care, and skilled nursing facilities. There are lower out-of-pocket costs. There is
flexibility in choosing providers.
For providers, Medicare provides faster payments that are easier to file. There is a low
denial rate, and the fee schedule is transparent. This allows the physician to establish a
predictable cash flow. For new practices, Medicare beneficiaries can help the practice grow.
Medicare Advantage
Purpose
Medicare Advantage is a Medicare program called Part C. Private health insurance
companies offer these plans. They include Part A and B coverage. They must provide the same
coverage level as original Medicare. What the patient pays will vary by program. Once the out-
of-pocket limit is reached, services are covered at 100%. These plans will sometimes have Part D
combined to cover the costs of medications. Medicare Advantage plans also offer extra benefits
that original Medicare does not, such as vision, hearing, and dental coverage.
Reimbursement
Providers will send claims to the appropriate Medicare Advantage company. As with
traditional Medicare, a deductible, coinsurance, or copay may be associated with the claim.
Medicare Advantage reimbursement varies. Clean electronic claims will generally be reimbursed
within 14 days. The process for clean paper claims is around 30 days.
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Benefits
Medicare Advantage programs will cover the cost of Medicare Part A, Part B, and Part D.
Medicare Advantage programs provide extra coverage, depending on the plan, that may include
vision, dental, and hearing coverage. There is a maximum out-of-pocket cost with most of the
Advantage plans. Another benefit would be coordinated care among providers. The price for
Medicare Advantage, with the extra services, is very close to the original Medicare or lower
price.
For providers, they may opt in and out of plans. Providers may receive an incentive from
the insurance company for providing quality care that helps to reduce the services provided to a
patient.
Steps for Reimbursement
Steps for reimbursement are the same for Medicaid, Medicare, and Medicare Advantage.
For physicians and hospitals to get paid, the following steps must be followed. Documentation in
the health care record. This will include the history, the presenting problem, the physical exam,
the diagnosis, and the treatment plan. Coders then assign medical codes to the record, including
ICD-10 codes for diagnosis and CPT codes for procedures or services. Hospitals also use a DRG
(diagnosis-related group) code on their claims. This step can be time-consuming, especially for
Medicaid claims. Pre-authorization also adds time and resources to ensure that the provider will
be paid for the recommended service.
The next step is to submit the claim electronically. Claims may be submitted directly by
the payers or through a clearing house. The benefit of a clearing house is that they will review
the claims for errors and make corrections as needed. Once the claim is received, the payer will
verify beneficiary and provider eligibility. After the claims are submitted to the payers, the payer
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reviews the claim and either pays the allowable amount, rejects the entire claim, or rejects part of
the claim. If there is a rejection, the providers will be notified using remittance advice codes with
a brief explanation. If the provider has to resubmit the claim after a rejection, time and resources
will be used to research the needed information for the claim. Using a clearing house to submit
claims will reduce resources and mistakes.
The payer may request a post-payment audit. The payer can request additional
documentation to ensure that claims are paid correctly. Providers may have to repay the
reimbursement if claims do not support the billed services.
Conclusion
Reimbursement for Medicaid, Medicare, and Medicare Advantage claims can be time-
consuming if not done correctly. Providers must file correct claims the first time to ensure they
are paid as quickly as possible. Reimbursement can take two weeks to several months to occur.
Each type of plan has its benefits to beneficiaries and providers alike.
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References
Dually Eligible Beneficiaries Under Medicare and Medicaid (hhs.gov)
Evaluating Medicare Advantage Value-Based Contracts. American Medical Association. 2019.
Evaluating Medicare Advantage Value-Based Contracts (ama-assn.org)
Mcaskill, Ryan (2014, November 4). Examining Differences Between Medicare, Medicaid
Reimbursement.
Examining Differences Between Medicare, Medicaid Reimbursement
(revcycleintelligence.com)
Healthcare 101: How Healthcare Reimbursement Works? (carecloud.com)
Medicaid Managed Care Reimbursement (hhs.gov)
Eramo, Lisa (2023, July 31). The pros and cons of Medicare for independent practices.
Medicaid
Reimbursement: Everything You Need to Know - Procurement Partners
Medicare Reimbursement | Forms and More | MedicareFAQ
The pros and cons of Medicare for independent practices - The Intake (tebra.com)
Mandelbaum, Ben (2015, September 15). Understanding Medicaid reimbursement.
Understanding Medicaid reimbursement - McKnight's Long-Term Care News
(mcknights.com)
Welcome to Medicare | Medicare
What’s the difference between Medicare and Medicaid? | HHS.gov