Financial Management Principles And Healthcare Insurance Plans Essay.

As you complete each section of your final project, remember that you are assuming the role of hospital administrator, so you will identify the important elements of healthcare insurance plans and the overall impact of financial management principles. Financial principles to focus on include the elements of the revenue cycle, types of reporting, and the financial data that is needed for hospital administrators to evaluate the cost and quality of processes.

Financial Principles and Reimbursement:
a) Reimbursement Strategies: What is the impact of case rates and management utilization data on pay-for-performance incentives? Be sure to provide support for your response.
b) Reimbursement Methods: Analyze reimbursement methods, describing the advantages and disadvantages of each method in terms of strategic planning for operational performance. For example, why might one method be more advantageous than another at a hospital or at a physician’s office?
c) Financial Management Principles: Compare and contrast financial management principles such as financial data that describe financial performance of revenue reimbursement, benchmarking of industry standards, payer-mix breakdown of payers, and case rate and utilization rate data used to evaluate operational performance.
d) Accounts Receivable: What are the challenges associated with collecting payments for the accounts receivable or collections department, and what is the significance of monitoring cash flow and days in accounts receivable in terms of reimbursement?
e) Teamwork Principles: Compare and contrast collaborative teamwork principles to most effectively develop strategic planning that involves cross disciplinary teams. In other words, what principles work best for teams where individuals are from both clinical and non-clinical departments? What are some of the challenges this might present for cohesive collaboration? Be sure to provide support for your response.
f) Maximizing Reimbursement: Generally speaking, to what extent do you feel healthcare organizations utilize case rates and management utilization to maximize reimbursement from both government and third-party payer payment systems? Be sure to provide support for your response.

Financial Principles and Reimbursement

Health insurance plans refer to the process of determining causes of action in making the health services cheaper and affordable across the disadvantaged societies. It's fundamental for individuals seeking health care to have the services enshrined within their financial picture (UnitedHealthcare, 2018). Therefore, this essay is set fundamentally to explore different elements of the health care plans while expressing the implication of the financial management principles on health insurance plans.

Reimbursement refers to the process of repaying the money that has been lost by an individual. A strategy, on the other hand, is a method that is chosen by an individual or an entity to enhance the achievement of a particular predetermined goal and objectives. In other words, a strategy can be a solution to a particular problem. Therefore, a reimbursement strategy refers to all incentives that are aimed at enhancing higher performance regarding cost recovery or maintenance of lower costs within a health care system. One of the fundamental strategy to employ is the pay-for-performance technology. The pay-for-performance strategy is a compensation structure whereby the employees of the organization are assessed with regard to their levels of performance. Another reimbursement strategy is the Value-Based Purchasing (VBP) method. The VBP method involves the process of linking provider payments as a strategic approach in enhancing professionalism among the health care providers (HealthCare.Gov, 2018). Value based purchasing is preferred to pay-for-performance.

Reimbursement is categorized into two main methods.  The two categories include the fee-for-service and the capitation method. Following the fee-for-service method, several variations exist whereby the amount paid is directly proportional to the amount of reimbursement. Under the capitation method, a fixed amount of reimbursement is provided to the health care providers for each enrollee or covered life regardless of the amount of services provided.

The fee-for-service reimbursement is further divided into three that is the charge based, cost based and the prospective payment reimbursement (Gapenski, & Pink, 2007). Under the cost-based reimbursement, the payer reimburses the provider of the health care services based on the cost incurred during the process. Compensation is limited to the allowable costs (costs incurred during the delivery of the health care services). Charge-based reimbursement involves the payment of the billed charges as per the rate schedules prepared by the medical provider (Chargemaster). In prospective payment, the payer establishes the rate to be paid before the service is provided. However, in capitation, a fixed payment is established for a given period regardless of the amount of work and provided. Fee-for-service method of reimbursement has proven to promote hard work among medical professionals. Most health care providers in operating systems are at pace in delivering as much amount of services as possible in order to increase their payment and compensation income. Therefore, adoption of the fee-for-service method unlike in capitation is likely to promote hard work among the medical physicians. However, the relevance of the fee-for- service method is questionable following the quality ideology. Most physicians are likely to deliver more services without considering the right procedures that will aim at enhancing the quality of the health care services just fundamentally to raise their earnings. Therefore, capitation has proven relevant while enhancing the quality of the health care services.

Methods of Reimbursement

The primary function of the principles of financial management is to manage money and risk in a way that helps to achieve financial goals, thus providing competent healthcare to all patient. The purpose of the benchmarking process is to evaluate the cost and quality of health care services within the organization.  The most significant operational information to be evaluated entails the financial data within the annual report of the organization. The relevant financial principles in evaluating the cost and quality of health care services include, financial data, types of reporting and revenue cycles. Some of the financial data required include the balance sheet which tells the liabilities of the firm and the income statement that provides the profitability of the firm (Analysis of the expenses of the firm relative to the revenue generated). Therefore the balance sheet and the income statement helps in evaluating the cost of services in the organization. Revenue cycles are also fundamental in measuring the quality of services in the organization. Often, the revenue of the organization is linked to the development and expansion of the firm. Therefore, a firm that indicates expanding trends in revenue within the revenue cycles is assumed to be developing both in quantity and quality. The quality of the operational services can also be evaluated through the kind of reporting adopted by the company. A company with short-term (quarterly) reporting structure is likely to identify minor deviations from the plan unlike the organizations whose reporting is long-term (Annual). Therefore, financial management principles have a great impact on the evaluation of cost and quality of health care services.

The main goal of receivable accounts is to achieve a faster and shorter collection period possible. Receivable accounts encounter some problems like denial of an insurance claim, unnecessary debts, unnecessary write-offs and unmotivated staff (Roger, 2017). The significance of receivables underlines enabling early collection of revenue which will allow proper planning for the future. Shortening the period of revenue collection in this case is essential for proper evaluation of the cost of services offered by the health care organization. Additionally, early collection of revenues generated can help implement early reimbursement program which will motivate the health care providers to offer quality services within the organization. Evaluation of the plan is also enhanced if the period of revenue collection is shortened unlike if the long-term performance of the company is awaited before taking on the respective courses of actions ion the gaps presented.

In any organization, teamwork is essential for the realization of achieving the intended goals. Some of the principles that promote teamwork include division of labor, communication, collaboration and support (Jones, 2017). The best principles for collaborative cooperation include identifying a leader who establishes a clear direction and vision for the team which supports, supervise the team members and incorporation of values within the team members. The challenges that can hinder the above principle from being effective are misunderstanding amongst workers and lack of chain of command to ease the flow of information within the organization. Usually, planning involves the selection of the best course of action from alternatives. In such a case, collaborative teamwork is essential in providing as many alternatives as possible for reducing the cost of health care services while improving the quality of healthcare. Usually, the probability of selecting an effective strategy depends solemnly on the number of alternatives presented. On the other hand, the number of alternatives relies on teamwork. Therefore, planning is enhanced under collaborative teamwork unlike when the entire process is made subjective.

Efficient maximization of reimbursement entails implementation of various strategies. A typical example of such strategies includes making use of eligible tools that will help the successful use of financial stability (Riley, 2015). The tendency of the patient to cover for his/her health bills helps to direct the staff on appropriate ways to stabilize their financial status. For an effective maximization reimbursement, three fundamental concepts must be brought into concern. The three ideologies include, strategic planning, data and the utilization management. Under the utilization management concepts, optimal use of the medical specialists must be enhanced for economical purposes. The medical specialists can only be optimally utilized if the correct data is analyzed to enhance proper strategic planning for the achievement of the desired objectives. The data in this case includes the financial information contained in financial statement and balance sheet including other books of accounts. However, strategic planning that optimize the reimbursement includes compensation of medical specialists with respect to their value output rather than their performance.

References

Kearney, A. (2018). Financial management in healthcare organizations: Roles and Functions [online]. Retrieved from: https://study.com/academy/lesson/financial-management-in-healthcare-organizations-roles-functions.html [Accessed on 19, October 2018).

STI (2016). The five key elements of any health insurance plan [online]. Retrieved from: https://www.santaninsurance.net/key-elements-health-insurance-plan/ [Accessed on 19, October 2018].

Gapenski, L. C., & Pink, G. H. (2007). Heath Insurance and reimbursement methodologies. Chicago: Health Administration Press. Retrieved from: https://www.ache.org/pubs/GapenskiReiter_chapter2.pdf (Accessed on 30, October 2018).

HealthCare.Gov, (2018). Value Based Purchasing (VBP). Retrieved from: https://www.healthcare.gov/glossary/value-based-purchasing-vbp/ [Accessed on 30, October 2018).

Jones, C. (2017). 5 principles guaranteed to help build a strong team culture. Retrieved from: https://medium.com/walmartlabs/5-principles-guaranteed-to-help-build-a-strong-team-culture-6055ab478c56 [Accessed on 19, October 2018].

Riley, J. (2015). Maximizing Reimbursement Starts with Patients Access [online]. Retrieved from: https://www.hfma.org/Content.aspx?id=27386 [Accessed on 19, October 2018].

Roger, R. (2017). Nine most common Medical Accounts Receivable Problems and How to fix them[online]? Retrieved from: https://www.cogneesol.com/blog/9-most-common-medical-accounts-receivable-problems-and-how-to-fix-them/ [Accessed on 19, October 2018].

UnitedHealthcare (2018). Health Insurance Plans [online]. Retrieved from: https://www.uhc.com/individual-and-family/health-insurance-plans [Accessed on 19, October 2018].