Implementation for Medicare and Medicaid and Its Payment Mechanism

Subject: Administration and Regulation
Pages: 3
Words: 594
Reading time:
3 min
Study level: School

The payment methods for Medicare and Medicaid have over the years been criticized for being rigid and cumbersome. Physicians have faced numerous challenges in their attempts to get reimbursements. These challenges have affected the delivery of health services by physicians especially those in private practice. To normalize the situations, solutions to the challenges faced by the physicians must be sought.

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One of the solutions is the use of care contracts which include the packages for the payment of the fees and the reimbursement of the same Lack of contracts creates numerous challenges for the physicians. In the contracts, there should be a provision for precertification, authorization, and the use of very flexible pay networks. This will make the managed care environment to convenient because most organizations are operating using hybrid models.

Several methods should be used by the private players to pay back the providers. Most insurance companies do not just use one method to pay back the providers; they use a variety of methods. One of the most popular methods is called capitation which operates on a per member -per month basis. The rates of capitation are not constant. They depend on external factors such as age, gender, the status of health and even geographical locations but they do not vary on the type of service that has been extended to the people who use it. Some physicians are more capitated than others. The primary care physicians get more capitation than the specialty care physicians especially on the HMO basis but in the FFS plans the amount paid back is based on the distribution of the resources that had been used initially. The FFS plans are more rigid and operate on superficial grounds with the belief that if the physicians are paid more, they will deliver more. This means that the FFS is performance-based though its usage has become very rare. The use of the capitation method is one of the best ways that can solve the problems facing the Medicare and Medicaid payment systems.

There are also federal regulations that affect reimbursement especially in the federally funded health care programs like Medicare and Medicaid and these regulations determine the financial risk that a physician will undergo though they contain a buffer against losses for the physicians (Thames, p. 34). These regulations affect the physicians on a pay-for-performance basis because the main goal of this method is to align financial rewards with improvement in performance which promotes better outcomes and efficiency. It has been found that physicians need to be motivated to perform better and operate efficiently and the best way to motivate them is by paying them their worth. If they are not paid their worth, they will have a low drive which could adversely affect their performance.

However, since the physicians have taken an oath that they will provide quality care; their efficiency should not be based on monetary rewards. The bottom line is that there are unique challenges that are facing the non-profit making health care organizations because they do not respond to incentives that are supposed to maintain quality (Kongstvedt, p. 67). Some factors are supposed to facilitate behavior change so that these physicians can give quality services just like the pay for performance physicians. This means that other ways of motivating the behavior of these physicians need to be used to improve efficiency and quality in government-funded programs like Medicare and Medicaid which cannot use the pay for performance method because of its high cost and complexity. A conceptual framework needs to be put in place to address this issue.

Works Cited

  1. Kongstvedt, Peter. Essential of Managed Health Care. New York: Sage, 2006.
  2. Thames, Dave. Federal health care programs: The challenges: N J: Pearson, 2010.