Refer to Chapter 4

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Keiser University *

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2250

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Mechanical Engineering

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Dec 6, 2023

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docx

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1. Refer to Chapter 4, focus on Payment Methodologies and discuss the various payment systems. Demonstrate understanding of fee for service, cost based, and prospective payment systems. There are many payment methods. Payment’s methods are used only inpatient or outpatient hospitals. There can be that payment method is defined by units’ payment for example, the time, episode, day, service etc. Free of service is the most traditional payment mechanism. Physician are paid for services and test that they provide. The payer has a free schedule with a set reimbursement amount for each service it covers. REF 179 Cost based method is when providers or facilities submit an annual cost report that details the expenses of running their businesses. Under this method facility may receive payments from the payer through the year. A Prospective Payment System is a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service (for example, diagnosis-related groups for inpatient hospital services). REF https://www.cms.gov/Medicare/Medicare-Fee-for-Service- Payment/ProspMedicareFeeSvcPmtGen 2. Explain medical necessity and how it impacts payment. Medical necessity is a term health insurance providers use to describe whether a medical procedure is essential for your health. Whether your insurer deems a procedure medically necessary will determine how much of the cost, if any, it will cover. Instead of rejecting the claim, some payers will “downcode” it based on the diagnosis. For example, if your doctor bills a Level 4 established office visit code (99214) when he sees you for your sore throat, your insurance company may decide that a sore throat should never be more complicated than a Level 3 service. In fact, the insurer may implement a process of rejecting all Level 4 and 5 claims and require physicians to submit additional documentation in order to be paid. This practice penalizes not only physicians who might use the higher level codes without clinical justification, but all other physicians who actually document according to the requirements of the higher levels. The AMA (2005) has developed policies strongly opposing downcoding 3. What has been the effect of payment methods on coding?
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