Chapter 10Fiscal Planning and Health-Care Reimbursement Flashcards
Exam 2 (115 cards)
1
Q
Fiscal Planning:
What kind of skill is it?
A
Not intuitive, it’s a learned skill that improves with practice
2
Q
Fiscal Planning:
What is it considered?
A
It is proactive NOT reactive
3
Q
Fiscal Planning:
It is important but is often what?
A
An important but often neglected dimension of planning process of management
4
Q
Fiscal Planning:
What should it reflect?
A
Should reflect the philosophy, goals, and objectives of the organization
5
Q
Fiscal Planning:
Who is this skill increasingly critical to? Why?
A
A skill increasingly critical to nursing managers because fiscal planning requires vision, creativity, and a thorough knowledge of the political, social, and economic forces that shape health care
6
Q
Fiscal Planning:
How are subordinates involved?
A
Subordinates should be included in the process- BUT aren’t involved in the actual planning –that’s a manager’s role
7
Q
Fiscal Planning: What is it?
A
Fiscal planning is budget and money and money control.
8
Q
Fiscal Planning: What is it?
A
Fiscal planning is budget and money and money control.
9
Q
Fiscal Planning:
Why do you need to budget?
A
You need to budget to make sure resources are being used properly and are actually making a profit.
10
Q
Fiscal Planning:
What provides the majority of hospital reimbursements (80%-90%)?
A
Medicaid and Medicare.
They are the largest payer for healthcare services in the US.
11
Q
Balancing cost and quality:
What is this?
A
Cost containment and quality care
12
Q
Balancing cost and quality:
What does cost-effective mean?
A
Cost-effective means producing good results for the amount of money spent.
It is worth the cost
13
Q
Balancing cost and quality:
What items can be or not be cost-effective?
A
Expensive items can be cost-effective and inexpensive items may not.
14
Q
Balancing cost and quality:
What must cost-effectiveness take into account?
A
Cost-effectiveness then must take into account factors such as anticipated length of service, need for such a service, and availability of other alternatives.
15
Q
Balancing cost and quality:
What is cost containment?
A
Refers to the effective and efficient delivery of services while generating needed revenues for operations
16
Q
Balancing cost and quality:
Who is cost containment the responsibility of?
What does the viability of most healthcare organizations depend on?
A
Is the responsibility of every health care provider, and the viability of most health care organizations today depends on their ability to use their fiscal resources wisely
17
Q
Responsibility Accounting
What does this mean?
A
Each of an organization’s revenues, expenses, assets, and liabilities is someone’s responsibility.
18
Q
Responsibility Accounting
Who is held accountable?
A
As a corollary, the person with the most direct control or influence on any of these financial elements should be held accountable for them, usually the leader-manager.
19
Q
Responsibility Accounting
Who is responsible for the way that resources are used on the unit?
A
The manager is accountable for the way that resources on used on the unit.
20
Q
Budget: What is it?
A
A plan that uses numerical data to predict the activities of an organization over a period of time.
21
Q
Budget
The budget value is directly related to what?
A
The budget value is directly related to its accuracy.
22
Q
Budget
What is the manager’s responsibility when it comes to budgetting?
A
The manager’s responsibility is to monitor and evaluate all aspects of the unit’s budget in the unit under their leadership.
23
Q
Budget
Who is primarily responsible for budgeting?
A
However primary responsibility for budgeting, which usually lies with a chief financial officer for the hospital.
24
Q
Budget:
The more accurate a budget, what will happen?
A
The more accurate a budget, the more they can plan for the most efficient use of its resources.
25
Budgeting Methods include
Incremental budgeting
Zero-based budgeting
Flexible budgeting
Performance budgeting
26
Budgeting Methods:
Incremental budgeting
This approach involves making adjustments to the previous year's budget based on incremental changes
27
Budgeting Methods:
Incremental budgeting: This approach involves making adjustments to the previous year's budget based on incremental changes.
What are examples of incremental changes?
as inflation
salary increases
minor modifications
28
Budgeting Methods:
Zero-Based Budgeting: What does it require?
Unlike incremental budgeting, zero-based budgeting requires a complete re-evaluation of all expenses and activities.
29
Budgeting Methods:
Incremental budgeting: What assumption is made when using this budgeting method?
It assumes that the previous year's budget was appropriate and focuses on making small adjustments rather than starting from scratch.
30
Budgeting Methods:
Zero-Based Budgeting: How does each budget cycle begin?
Each budget cycle begins from a "zero base," meaning that every item must be justified for inclusion in the budget.
31
Budgeting Methods:
Zero-Based Budgeting: Each budget cycle begins from a "zero base," what does this method encourage?
This method encourages a thorough review of all costs and prioritization of resources based on the organization's needs and goals.
32
Budgeting Methods:
Flexible Budgeting: What does it allow for?
Flexible Budgeting: Flexible budgeting allows for adjustments in expenses based on changes in activity levels or volume
33
Budgeting Methods:
Flexible Budgeting: What does it take into account?
It takes into account the variability in workload or patient volume and adjusts the budget accordingly.
34
Budgeting Methods:
Flexible Budgeting: What does this approach help do?
This approach helps maintain financial stability by aligning expenses with the level of activity, ensuring that resources are allocated appropriately.
35
Budgeting Methods:
Performance Budgeting: What does it focus on?
Performance budgeting focuses on outcomes and results.
36
Budgeting Methods:
Performance Budgeting: What does this kind of budget do?
It links the budget to specific goals and objectives and measures the performance and effectiveness of various activities and programs.
37
Budgeting Methods:
Performance Budgeting: What does this approach emphasize?
This approach emphasizes accountability and encourages decision-making based on the expected outcomes and the cost-effectiveness of interventions.
38
Budgeting Methods:
What do the four methods of budgeting offer?
These four budgeting types offer different approaches to financial planning and resource allocation within healthcare organizations.
39
Personnel Workforce Budget:
Healthcare is what?
Health care is labor-intensive.
40
Personnel Workforce Budget:
What accounts for the majority of most healthcare organization's expenses?
The personnel budget accounts for the majority of most health-care organization’s expenses.
41
Personnel Workforce Budget:
What is the cost of a new nurse?
Salary + 35% = cost of a new nurse.
35% = health benefits, sick time, holiday time.
42
Personnel Workforce Budget:
What are the expenses of having a new nurse?
As a new nurse, its not just your salary.
This includes your onboarding process- to train, have HR people to deal with your paperwork, which takes time and money.
Preceptor- training a new nurse.
43
Operating Budget:
What is an operating budget?
The operating budget reflects expenses that flex up or down in a predetermined manner to reflect variation in volume of service provided.
44
What is the second most significant component in the hospital budget?
The Operating budget; Next to personnel costs, supplies are the second most significant component in the hospital budget
45
Capital Budget
What do capital budgets plan for?
Capital budgets plan for the purchase of buildings or major equipment.
This includes equipment that has a long life (usually greater than 5 years), is not used daily, and is more expensive than operating supplies.
46
Capital Budget
What kind of equipment does capital budget include?
This includes equipment that has a long life (usually greater than 5 years), is not used daily, and is more expensive than operating supplies.
47
Capital Budget
Who is in charge of this?
Usually restricted to chief financial officer.
Usually anything 20-30 thousand dollars goes into capital budget.
48
A Trip Through Time #1
Late 1920s
Great Depression
Stock Market Crash
49
A Trip Through Time #2 Birth of “The Blues” Blue Cross (1929)
1929- Origins of Blue Cross when Baylor University Hospital establishes a prepaid hospital insurance plan for schoolteachers in Dallas, Texas (1500 teachers up to 21 days of Hospital stay for $6/year)
50
A Trip Through Time #2 Birth of “The Blues” Blue Cross (1929)
What was the Baylor plan?
The Baylor plan, which paid for services incurred during hospitalization, was an early prototype of future hospital insurance plans.
It quickly increased its subscriber base, and while it operated at a deficit in its first years, the loss to the hospital was not as great as it would have been had the subscribers entered the hospital without insurance.
51
A Trip Through Time #2 Birth of “The Blues” Blue Cross (1929)
Prior to the Great Depression, how did people pay for healthcare?
Prior to great depression, people paid out of pocket for healthcare. They even used barter system.
52
A Trip Through Time #2 Birth of “The Blues” Blue Cross (1929)
What was it?
it was a partnership between a local hospital and its financially struggling patients.
53
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
What does “fee for service” reimbursement mean and how did it contribute to spiraling health-care costs?
**The Fee For Service (FFS) method of reimbursement is one of which insurance companies reimburse healthcare providers a billed amount for services after the service are delivered.
54
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The Fee For Service (FFS) method of reimbursement is one of which insurance companies reimburse healthcare providers a billed amount for services after the service are delivered.
What may this result in?
Unfortunately, this may result in extra or unneeded services that can increased the bill.
55
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
In the context of healthcare reimbursement, "fee for service" refers
In the context of healthcare reimbursement, "fee for service" refers to a payment model where healthcare providers are reimbursed based on the number and types of services they provide to patients.
56
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
Under this system, how are services paid out?
Under this system, each service is assigned a specific fee, and providers are paid for each service rendered.
57
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
How are Doctor's paid in this model?
Doctors are paid a set amount regardless of patient outcomes.
58
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
What was reimbursement based on?
Reimbursement was based on cost incurred to provide the service + profit.
59
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
How much reimbursement was allowed?
Limitless reimbursement from insurance carriers.
60
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
Doctors are paid a set amount regardless of patient outcomes.
What did this mean?
Little motivation by providers to save costs.
61
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
Limitless reimbursement from insurance carriers.
Little motivation by providers to save costs.
This led to what?
Therefore, Hospitals used Incremental budgeting method.
62
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The "fee for service" reimbursement model contributed to spiraling healthcare costs for several reasons:
1. Over-utilization
2. Fragmented care
3. Lack of cost control
4. Incentives for unnecessary services
63
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The "fee for service" reimbursement model contributed to spiraling healthcare costs for several reasons:
Over-utilization: Why did this occur?
Providers had an incentive to offer more services and perform additional procedures since they were reimbursed on a per-service basis.
This led to unnecessary or excessive tests, procedures, and interventions being performed, driving up healthcare costs.
64
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The "fee for service" reimbursement model contributed to spiraling healthcare costs for several reasons:
Fragmented care: What results in fragmented care?
The focus on individual services and reimbursements for each service often resulted in fragmented and episodic care.
65
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The "fee for service" reimbursement model contributed to spiraling healthcare costs for several reasons:
Fragmented care: What can fragmented care lead to?
This fragmented approach could lead to a lack of coordination among healthcare providers, potentially impacting patient outcomes and increasing overall costs.
66
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The "fee for service" reimbursement model contributed to spiraling healthcare costs for several reasons:
Lack of cost control: What is the emphasis on?
With the fee for service model, the emphasis was on volume rather than value or cost-effectiveness.
67
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The "fee for service" reimbursement model contributed to spiraling healthcare costs for several reasons:
Lack of cost control: With the fee for service model, the emphasis was on volume rather than value or cost-effectiveness. Why does this mean?
This meant that there was limited control over healthcare costs since reimbursement was primarily based on the quantity of services provided, rather than the quality or efficiency of care.
68
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The "fee for service" reimbursement model contributed to spiraling healthcare costs for several reasons:
Incentives for unnecessary services: Why does this happen?
The fee for service model created financial incentives for providers to offer more services, even if they were not medically necessary.
69
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The "fee for service" reimbursement model contributed to spiraling healthcare costs for several reasons:
Incentives for unnecessary services: What did this incentivize? What did this result in?
This incentivized the provision of services that may not have been beneficial to the patient's health or well-being, resulting in unnecessary healthcare spending.
70
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The "fee for service" reimbursement model contributed to spiraling healthcare costs for several reasons:
Because of rapidly escalating cost, what did the government begin establishing?
But then, because of these rapidly escalating cost, the government began establishing regulation requiring organizations to justify the need for services and to monitor the quality of services .
71
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
The "fee for service" reimbursement model contributed to spiraling healthcare costs for several reasons:
Because of rapidly escalating cost, what did the government begin establishing?
Health care providers were forced for the first time to submit budgets and justify costs this new surveillance and existence of external controls had a tremendous effect on the health care industry.
72
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
In recent years, efforts have been made to transition away from the fee for service model towards what?
In recent years, efforts have been made to transition away from the fee for service model towards value-based care and alternative payment models that focus on outcomes, quality, and cost-effectiveness.
73
A Trip Through Time #3 : Health Care Reimbursement “Fee for Service” (FFS)
In recent years, efforts have been made to transition away from the fee for service model towards value-based care and alternative payment models that focus on outcomes, quality, and cost-effectiveness.
These new models aim to what?
These newer models aim to promote efficient and coordinated care while controlling healthcare costs.
74
A Trip Through Time #4
How did third party payment for health care change?
Third-party payment for health care escalated from <20% pre-WWII to 70% by the early 1960s.
75
A Trip Through Time #4
Factor leading to increase in third party payments in healthcare?
Medicaid/medicare in 1960
More employer sponsored health insurances.
Advancement in medical technology and healthcare services.
76
What happened in 1965 that changed health care in the US?
Medicare/Medicaid
77
Medicare/Medicaid:
Who was it meant for?
Provides health insurance for specific populations. It was really meant for the elderly and low income.
78
Medicare/Medicaid:
Positives:
it increased access to healthcare services by reducing the financial burden on individuals who did that.
79
Medicare/Medicaid:
Negatives:
led to lack of cost consciousness among providers and patients. They were less responsible of healthcare services.
80
Medicare:
When was it established?
1965
81
Medicare:
Who are the primary populations of Medicare?
Primary populations are elderly, disabled, and renal dialysis patients.
82
Medicare:
What are the parts?
Part A and Part B
83
Medicare:
Part A: What is it funded by?
Part A funded by Social Security tax and federal taxes.
84
Medicare:
Part B: What is it funded by? How much does Part B cost?
Part B subsidized 75% by federal government and 25% by subscribers.
$135 a month
85
Medicaid:
When was it established?
Established in 1965
86
Medicaid:
Who is the main population?
Primary population is the financially indigent.
87
Medicaid:
Who are the majority of medicaid recipients?
Medicaid covers what percent of the population?
The majority of Medicaid recipients are women and children.
Covers about 17% of the US population
88
Medicaid:
Who administers Medicaid?
Administered by the states under broad federal guidelines
89
Managed Care: What is it?
Broadly defined as a system that attempts to integrate efficiency of care, access, and cost of care
90
Managed Care
How are providers seen?
Providers as gatekeepers
91
Managed Care
What does it focus on?
Focus on Prevention less inpatient care
92
Managed Care
What are key principles/characteristics of managed care?
the use of primary care providers as gatekeepers,
a focus on prevention,
a decreased emphasis on inpatient hospital care,
the use of clinical practice guidelines for providers,
selective contracting,
capitation,
utilization review,
the use of formularies to manage pharmacy care, and
continuous quality monitoring and improvement.
93
Managed Care
How is the patient's choice of healthcare provider?
The client’s choice of health-care providers is often limited.
94
Managed Care
Utilization Review: What is it?
A process used to assess the need for medical care and to ensure that payment will be provided for the care
95
Capitation: A Hallmark of Managed Care Organizations (MCO’s)
What is capitation?
Capitation is a prospective payment system (a method of reimbursement) that pays health plans or providers a fixed amount per enrollee per month to provide a defined set of health services based on enrollee needs.
96
Capitation: A Hallmark of Managed Care Organizations (MCO’s)
With capitation, how are providers paid? What is the providers' payment based or not based on?
The client’s *providers are paid the same amount each month, regardless of the client’s use of services.
97
Capitation: A Hallmark of Managed Care Organizations (MCO’s)
*Providers –Managed Care Organizations (MCOs): What are they?
*Providers –Managed Care Organizations (MCOs) insurance companies/private physician groups
98
Capitation: A Hallmark of Managed Care Organizations (MCO’s)
What is risk sharing?
Risk Sharing –Balancing Risk
99
Capitation: A Hallmark of Managed Care Organizations (MCO’s)
What is a prospective payment system?
**A prospective payment system is one in which the hospital payment system has predetermined reimbursement ratio for services given.
100
Capitation: A Hallmark of Managed Care Organizations (MCO’s)
Under the capitation prospective payment system, the MCOs receive a fixed monthly payment, known as a capitation payment, for each enrolled beneficiary.
What is capitation payment based on?
This payment is predetermined and based on various factors such as age, gender, geographic location, and health status of the enrollee.
101
Capitation: A Hallmark of Managed Care Organizations (MCO’s)
Why does risk sharing occur?
MCOs assume the financial risk associated with providing healthcare services to the enrolled population.
**They receive a fixed payment regardless of the actual healthcare services provided or the cost of those services. If the actual costs of care exceed the capitation payment, the MCOs bear the financial burden. Conversely, if the costs are lower, the MCOs may realize a profit.
102
Diagnosis-Related Groups (DRGs) and the Prospective Payment System #1
What is the standard method of payment for all insurance systems?
DRGs were adopted for payment for Medicare beneficiaries in the USA in 1982 and later became the standard method of payment for all insurance systems
103
Diagnosis-Related Groups (DRGs) and the Prospective Payment System #1
What are DRGs?
DRGs are a classification system used in healthcare to categorize patients with similar clinical conditions and resource utilization patterns.
104
Diagnosis-Related Groups (DRGs) and the Prospective Payment System #1
What are DRGs primarily used for?
They are primarily used in the context of inpatient hospital services and reimbursement.
105
Diagnosis-Related Groups (DRGs) and the Prospective Payment System #1
What do DRGs reflect?
Diagnosis-related groups (DRGs) are predetermined payment schedules that reflect historical costs for the treatment of specific patient conditions.
106
Diagnosis-Related Groups (DRGs) and the Prospective Payment System
What did DRGs change about Medicare?
The impetus of Diagnosis-related groups (DRGs) changed the structure of Medicare payments from a retrospectively adjusted cost reimbursement system( i.e., FFS =Fee For Service) to a prospective, risk-based one.
107
Diagnosis-Related Groups (DRGs) and the Prospective Payment System
With DRGs, hospitals join the prospective payment system (PPS) whereby...
With DRGs, hospitals join the prospective payment system (PPS) whereby they receive a specified amount for each patient’s admission regardless of the actual cost of care.
108
Diagnosis-Related Groups (DRGs) and the Prospective Payment System #1
With DRGS, what does the insurer pay the provider hospital?
The insurer pays the provider hospital for a procedure or diagnosis rather than the number of days of stay in hospital.
109
Diagnosis-Related Groups (DRGs) and the Prospective Payment System #1
As a result of the PPS and the need to contain cost, how was the length of hospital stays?
As a result of the PPS and the need to contain costs, the length of stay for most hospital admissions has decreased.
110
Look at slide 19 bottom comments?
111
What is the largest purchaser of managed care in the country?
The Centers for Medicare & Medicaid Services (CMS) is now the largest purchaser of managed care in the country.
112
Medicare and Medicaid Managed Care:
MCOs receive reimbursement for Medicare-eligible patients based on what?
MCOs receive reimbursement for Medicare-eligible patients based on a formula established by the CMS, which looks at age, gender, geographic region, and the average cost per patient at a given age. Then, the government gives itself a 5% discount and gives the rest to the MCO.
113
Medicare and Medicaid Managed Care:
Criticisms of Managed Care:
Loss of existing physician–patient relationships
Limited choice of physicians for consumers
Less continuity of care
Reduced physician autonomy
Longer wait times for care
Consumer confusion about the many rules to be followed
114
Types of Managed Care Organizations include:
Health maintenance organization (HMO)
Preferred provider organization (PPO)
115
Types of Managed Care Organizations:
Health maintenance organization (HMO)
include what?
Point of service (POS)
Exclusive provider organization (EPO)
