Assessment 1: Financial Basics Name Capella University FPX-5006 Professor’s Name March 2024

Financial Basics

Finance involves the oversight of financial resources and encompasses a range of tasks including investment management, obtaining funds through borrowing, creating budgets, and predicting financial outcomes. It can be broadly categorized into three main areas: individual finance, business finance, and community/government finance. Individual finance focuses on personal financial management, including budgeting, saving, investing, and understanding one’s income (Toyoda et al., 2020). Business finance involves managing finances within organizations, including budgeting, financial planning, and capital investment decisions. Community/government finance pertains to the management of public funds and resources by governments or community organizations to meet societal needs and goals. According to the US Financial Literacy and Education Commission, there are five key principles of financial literacy: earning, understanding income and maximizing its potential; protecting and investing to secure financial stability; saving for future needs and emergencies; growing wealth through investment and asset management; and lending wisely, whether it be through loans or investments. These principles serve as foundational pillars for individuals and organizations to achieve financial security and success.

Purpose of Health Care Reimbursement

Healthcare reimbursement programs serves as critical mechanisms for healthcare organizations to receive payment for services provided to patients, ensuring financial sustainability and continued delivery of quality care. These programs aim to facilitate access to healthcare services for individuals by covering operational costs, including staffing, equipment, and facility maintenance (Semprini et al., 2020). Through reimbursement, healthcare organizations can maintain financial viability and stability while fulfilling their mission of providing healthcare services to individuals, irrespective of their economic standing or capacity to cover expenses.

Eligibility

Medicaid

• Low-income individuals and families meeting specific income and asset criteria are eligible for Medicaid coverage.
• Pregnant women may qualify for Medicaid benefits based on income and household size.
• Children and adolescents from low-income households are eligible for Medicaid coverage, ensuring access to necessary healthcare services.
• Elderly individuals and people with disabilities who meet income and asset requirements can enroll in Medicaid for medical care and support services.
• Certain medically needy individuals who require long-term care may qualify for Medicaid coverage, providing financial assistance for essential healthcare needs.
• People who qualify for additional government aid initiatives, like Supplemental Security Income (SSI), also qualify for Medicaid benefits to access healthcare services (Toyoda et al., 2020).

Medicare

• Individuals who have reached the age of 65 qualify for Medicare coverage, providing access to essential healthcare services and medical insurance.
• Certain individuals under 65 with disabilities may qualify for Medicare benefits based on their disability status and need for medical care.
• Individuals with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS) as diagnosed conditions, regardless of their age, qualify for Medicare coverage to receive necessary medical treatment and support services (Semprini et al., 2020).
• Those who qualify for advantages from Social Security or the Railroad Retirement Board have the option to enroll in Medicare for the purpose of obtaining healthcare services.
• Spouses of eligible individuals who meet specific criteria may also be eligible for Medicare coverage under certain circumstances.
• Individuals with certain medical conditions or disabilities qualify for Medicare coverage based on their healthcare needs and eligibility criteria.

It is composed of multiple portions:

• Part A (hospital insurance)
• Part B (medical insurance)
• Part C (Medicare Advantage)
• Part D (prescription drug coverage).

Managed Care

• Employees enrolled in employer-sponsored health plans are eligible for managed care coverage, providing access to comprehensive healthcare services.
• Individuals enrolled in individual or family health insurance plans purchased through the Health Insurance Marketplace can access managed care services for medical care and treatment.
• Medicare beneficiaries enrolled in Medicare Advantage plans have the option to receive managed care coverage through private insurance companies, offering additional benefits and services beyond traditional Medicare.
• Medicaid beneficiaries enrolled in Medicaid managed care plans receive managed care coverage, ensuring access to coordinated healthcare services and support.
• Individuals registered in health maintenance organizations (HMOs) or preferred provider organizations (PPOs) have access to managed care services for comprehensive healthcare coverage (Moghtaderi et al., 2020).
• Individuals eligible for managed care plans offered by community health centers or nonprofit organizations can enroll to receive coordinated medical care and support services tailored to their needs.

Analysis of the Reimbursement Process

In understanding the reimbursement process for healthcare organizations, we delve into a multifaceted system influenced by various factors such as payer policies, regulatory requirements, and documentation standards. A comprehensive analysis involves dissecting each step in the reimbursement cycle, beginning with patient eligibility verification and culminating in payment receipt. Firstly, healthcare providers must ascertain patient eligibility for the specific insurance program, whether it be Medicaid, Medicare, or managed care plans. This entails validating demographic information, financial status, and insurance coverage to ensure compliance with program guidelines.

Medicare

Medicare Part A

Medicare Part A’s reimbursement process unfolds with providers submitting claims for services such as inpatient hospital stays, skilled nursing facility care, hospice services, and certain home health services to Medicare Administrative Contractors (MACs) (Moghtaderi et al., 2020). These claims, enriched with detailed service information, undergo meticulous review and processing, culminating in reimbursement typically received within weeks to months.

Medicare Part B

Medicare Part B’s reimbursement journey involves providers submitting claims for outpatient services, physician services, durable medical equipment, and medical supplies to MACs or Medicare Advantage plans (Moghtaderi et al., 2020). Following a similar review and processing trajectory, reimbursement is usually expedited within weeks to months.

Medicare Part C

Medicare Part C, bridges traditional Medicare and private insurance, with providers submitting claims to Medicare Advantage plans (Moghtaderi et al., 2020). Reimbursement timelines hinge on plan policies and processing efficiency, ensuring timely payments for rendered services.

Medicare Part D

Medicare Part D’s reimbursement narrative unfolds as providers submit claims for coverage of prescription drugs with Medicare Part D plans (Moghtaderi et al., 2020). The intricacies of claim review and processing dictate reimbursement timelines, promoting seamless access to prescribed medications for beneficiaries.

Medigap

As an adjunct to traditional Medicare, Medigap policies offer supplemental coverage to bridge the gap between out-of-pocket expenses and Medicare benefits. Medigap policies, standardized by federal and state regulations, cater to diverse healthcare needs, including deductibles, copayments, and coinsurance. Reimbursement processes mirror traditional Medicare, with providers submitting claims to Medigap insurers for supplemental coverage, ensuring comprehensive financial protection for beneficiaries (Kandilov & Kandilov, 2021). The expeditious reimbursement timeline underscores Medigap’s pivotal role in enhancing healthcare affordability and mitigating financial burdens for Medicare beneficiaries.

Medicaid

Understanding the Medicaid reimbursement system can be challenging due to its complex funding structure and varied benefits for recipients. Physicians often face difficulties managing Medicaid reimbursements, leading some to opt out of accepting Medicaid patients altogether. However, many healthcare providers are willing to navigate the complexities of Medicaid reimbursement to ensure patients receive necessary care. The payment process for Medicaid varies depending on the state’s Medicaid program. In fee-for-service (FFS) models, providers are reimbursed a set fee for each service rendered, while managed care organizations (MCOs) receive capitated payments or scheduled payments per enrollee, regardless of the services utilized (Giardino & De Jesus, 2020). These reimbursement rates may differ from those offered by private insurance companies or for uninsured individuals. In certain cases, providers may request enhanced Medicaid rates, which offer higher reimbursement rates based on factors such as the Federal Medical Assistance Percentage (FMAP) rate. The financing of the Medicaid program involves both federal and state governments, with the federal government providing reimbursing states for a portion of the program’s costs through the FMAP. The Federal Medical Assistance Percentage (FMAP) rates differ across states, influenced by factors such as per capita income, with states of lower income generally receiving higher percentages of federal matching funds. For instance, while the minimum FMAP rate in some states is 50%, others, like Mississippi, may receive a higher rate of up to 75% (Giardino & De Jesus, 2020). This means that states with higher FMAP rates, like Mississippi, can leverage more federal funds for each state dollar spent on Medicaid compared to states with lower FMAP rates. Exceptions to the FMAP formula exist, particularly with the enactment of the Affordable Care Act (ACA). The Affordable Care Act (ACA) brought about higher FMAP rates for Medicaid expansion groups, encompassing those with earnings of no more than 138% of the federal poverty threshold. States that expanded Medicaid eligibility under the ACA received enhanced FMAP rates, with the federal government covering all costs for newly eligible individuals initially and gradually reducing to a 90% federal contribution by 2020 (Breslau et al., 2020). States like New York and New Jersey, where Medicaid expansion was adopted, benefit from the enhanced FMAP rates, as they provide more federal funding without being subject to fluctuations based on per capita income.

Managed Care

Transitioning from traditional fee-for-service reimbursement models to managed care agreements often entails significant changes for healthcare providers. Managed care agreements often integrate payment models based on value, wherein reimbursement is tied to the attainment of particular health results. This shift is crucial for providers adapting to managed care, as it emphasizes quality management while simultaneously reducing costs (Nilsen et al., 2020). Managed care is a collaborative approach between managed care organizations (MCOs) and healthcare professionals, such as physicians, aimed at delivering high-quality care through integrated payment structures that align with performance, quality, and patient outcomes. There are four primary types of managed care organizations: Point of Service (POS) Organizations, Exclusive Provider Organizations (EPOs), Preferred Provider Organizations (PPOs), and Health Maintenance Organizations (HMOs). Each type may have variations in reimbursement methods, with HMOs typically utilizing capitation-based reimbursement models, while PPOs may opt for fee-for-service arrangements. The emergence of value-based payment models, such as capitation, marks a shift towards incentivizing healthcare organizations to focus on patient outcomes rather than the volume of services provided (Heeringa et al., 2020). While fee-for-service payment methods have long been prevalent, value-based reimbursement models offer MCOs the ability to better predict and manage escalating healthcare costs by tying reimbursement to patient health outcomes.

Information

Medicare

When filing for Medicare reimbursement, it is essential to complete Form 1490S, also known as the Patient Request for Medical Payment, accurately. This form requires detailed information about the services received, the reason for the claim, and the individual’s health insurance coverage. Whether the services were provided under Medicare Part A (hospital insurance) or Part B (medical insurance), the same form is used for reimbursement purposes. Along with the completed 1490S form, individuals must include the itemized bill from the healthcare provider, which should specify the date and location of the care received, the type of treatment provided, the associated costs, and the provider’s name and address. It is advisable to make a copy of all paperwork for personal records before submission. Once the paperwork is in order, it should be delivered or mailed to a Medicare contractor for processing. The Centers for Medicare & Medicaid Services (CMS) website offers details regarding Medicare administrative contractors (MACs), which are often regional insurers responsible for handling medical claim processing (Nilsen et al., 2020). These contractors play a crucial role in reviewing and adjudicating claims submitted by Medicare beneficiaries. By adhering to the necessary documentation requirements and following the submission process outlined by Medicare, individuals can facilitate timely reimbursement for eligible healthcare expenses.

Medicaid

Required Documentation

When a Medicaid user requests payment for healthcare services, they are required to provide comprehensive information to facilitate the reimbursement process. This involves providing a duplicate of the invoice or alternative valid evidence of the services provided. Additionally, the person is required to furnish information like the recipient’s name, as well as the name, contact details, and email address of the healthcare provider or facility rendering the service. It is crucial to include the date of the facility visit, along with process and analysis codes that accurately describe the services provided. Furthermore, the Medicaid user must specify the number of payable charges and provide confirmation of reimbursement. If the services involve durable medical equipment (DME), evidence of medical necessity from a doctor and recommendations for each item delivered must be provided (Nilsen et al., 2020). In the case of dental services, analysis, and process codes for each tooth treated must be included. For prescriptions filled at pharmacies, details such as the date of filling, National Drug Code (NDC), quantity distributed, retail price, and any discounts utilized must be documented. Moreover, evidence of reimbursement by private insurance, such as an Explanation of Benefits (EOB), may also be required. This thorough documentation ensures that Medicaid accurately processes reimbursement requests and helps prevent delays or denials in payment. By adhering to these documentation requirements, Medicaid users can simplify the reimbursement procedure and guarantee suitable coverage for their healthcare costs.

Needed Time

Medicare and Medicaid have different processing times for claims and applications. Medicare typically processes claims relatively quickly, especially if they are submitted online and deemed clean, with processing times averaging around 14 days. However, the standard processing time for most claims is approximately 30 calendar days (Wong, 2020). Nonetheless, there are exceptions to this timeline, particularly in cases where claims are inaccurately submitted or require revisions, which may result in delays. On the other hand, Medicaid application processing times vary from state to state. Each state has its own deadline for submitting Medicaid applications online, typically through a designated website. Once the application is submitted, the state health department works diligently to process it as promptly as possible. However, the processing period for Medicaid applications can range from 45 to 90 days, depending on the state’s procedures and workload. Once an individual’s Medicaid application is accepted, they typically have a limited window, often around 28 days, to select one of the available Managed Care Organizations (MCOs) to manage their health benefits (Cawley et al., 2021). After selecting an MCO, services become accessible within approximately ten days, allowing individuals to begin utilizing their healthcare benefits promptly. This structured process ensures that Medicaid beneficiaries can access necessary healthcare services in a timely manner after their application is approved and MCO selection is finalized.

Benefits of Reimbursement Programs

The financial stability of healthcare institutions and patients’ access to essential medical services are both significantly supported by reimbursement programs within the healthcare sector. These programs provide a structured mechanism through which healthcare providers are compensated for the services they deliver, thereby enabling them to manage operational costs, upgrade technology, and attract skilled healthcare personnel (Breslau et al., 2020). Additionally, reimbursement programs contribute to the overall financial strategy of healthcare organizations by stabilizing revenue streams and mitigating financial risks associated with providing care to patients. Moreover, such programs frequently encourage healthcare providers to offer quality care efficiently, as reimbursement is tied to performance indicators and patient results.

Medicare

Medicare, a government-funded health insurance initiative primarily catering to individuals aged 65 and above, offers coverage encompassing hospital care (Part A), medical services (Part B), and prescription medications (Part D). The purpose of the Medicare initiative is to guarantee eligible individuals have access to necessary healthcare services, including older adults and individuals with certain disabilities. Medicare reimbursement for healthcare organizations typically involves a process of submitting claims for services rendered to Medicare beneficiaries. Healthcare providers must adhere to Medicare billing guidelines and documentation requirements to receive reimbursement (Namburi & Tadi, 2020). This process can be complex, involving coding procedures, claim submission, and compliance with Medicare regulations. The reimbursement process for Medicare involves several steps, including verifying patient eligibility, submitting claims with appropriate documentation, and receiving payment from Medicare (Rivera et al., 2021). Healthcare organizations are required to provide detailed information about the services provided, including diagnosis codes, procedure codes, and patient demographics. The reimbursement process can be time-consuming and requires healthcare organizations to closely monitor claims submissions and follow up on any denied or delayed payments. Medicare offers numerous benefits for both patients and healthcare organizations. For patients, Medicare provides access to essential healthcare treatments, comprising hospital stays, consultations with healthcare professionals, and prescribed medications, without significant financial burden. Additionally, Medicare offers peace of mind and financial protection for older adults and individuals with disabilities by covering a portion of their healthcare expenses (Mackey et al., 2020). For healthcare organizations, participation in the Medicare program ensures a steady stream of revenue and access to a large patient population. Moreover, Medicare reimbursement rates are generally higher than those of other payers, making it an attractive source of revenue for healthcare providers.

Managed Care

Managed care is a healthcare delivery model that focuses on coordinating and managing healthcare services to improve quality and efficiency while controlling costs. Managed care organizations (MCOs) contract with healthcare providers to deliver services to enrollees in exchange for predetermined payments. The purpose of managed care programs is to provide comprehensive, coordinated healthcare services to enrolled individuals while controlling healthcare costs and promoting preventive care and wellness initiatives (Mackey et al., 2020). Managed care reimbursement models vary, but they often involve capitation, fee-for-service, or value-based payment arrangements. The reimbursement process for managed care organizations typically involves negotiating contracts with healthcare providers, establishing payment rates, and monitoring the quality and efficiency of care delivery. Healthcare organizations must adhere to contract terms and meet performance metrics to receive reimbursement from managed care plans (Rivera et al., 2021). The reimbursement process may involve submitting claims for services rendered, documenting patient encounters, and participating in utilization management activities. Managed care reimbursement rates may be adjusted based on provider performance, patient outcomes, and adherence to quality standards. Managed care programs offer several benefits for both patients and healthcare organizations. For patients, managed care plans often provide comprehensive benefits, including preventive care, wellness programs, and care coordination services, which could result in better health results and patient satisfaction. Managed care plans also offer cost-saving features, such as lower out-of-pocket expenses and reduced administrative burdens. For healthcare organizations, participation in managed care programs provides a steady source of revenue, access to a large patient population, and opportunities for care coordination and collaboration with other providers.

Medicaid

Medicaid, a collaborative effort between the federal and state governments, acts as a crucial support system for individuals and families with low incomes, granting them access to vital healthcare services (Mackey et al., 2020). The primary purpose of the Medicaid program is to ensure that vulnerable groups like pregnant women, children, persons with disabilities, and seniors can access essential healthcare services that may otherwise be financially out of reach for them. Medicaid reimburses healthcare organizations for services provided to eligible beneficiaries, offering a lifeline for financially vulnerable healthcare providers who serve these populations. The reimbursement process for Medicaid involves several steps. Healthcare organizations must verify patient eligibility, submit claims for services rendered, and adhere to Medicaid billing guidelines and documentation requirements. Each state administers its Medicaid program, resulting in variations in reimbursement rates, covered services, and administrative processes (Rivera et al., 2021). Medicaid reimbursement rates are typically lower than those of other payers, posing financial challenges for healthcare organizations that rely heavily on Medicaid revenue. Despite the complexity and lower reimbursement rates, Medicaid offers benefits for both patients and healthcare organizations. For patients, Medicaid provides access to essential healthcare services without significant financial burden, promoting health equity and improving health outcomes for vulnerable populations. For healthcare organizations, Medicaid reimbursement helps offset the costs of providing care to low-income individuals and families, ensuring financial stability and supporting the organization’s mission to serve its community.

MHA FPX 5006 Assessment 1 Financial Basics Conclusion