A. Increased costs of health care services, as well as consumer demand for high quality and safe care, have given rise to ever-changing methods of health care reimbursement. Quality of care has become an essential factor in reimbursement equations.

B. Changes in payment structures continue to take place in almost every sector of the health care industry. In the past, the most dominant driver for these changes was cost containment. Now, costs are coupled with quality processes and outcomes, as payers and the public are looking for value in health care delivery.

C. Reimbursement methodologies for health care services vary widely. They are determined by the reimbursement source/payer: PPS, managed care, capitation, fee for service, and so on.

D. Managed care encompasses a wide variety of terms and concepts, from the structure and purpose of the health care organization itself to the tools used in a health care delivery system or insurance plan.

E. Government-based insurers/payers (e.g., Medicare and Medicaid) programs often influence the processes used by managed care organizations and plans. For example, managed care is adopting many of the CMS quality metrics, such as readmissions and hospital-acquired conditions, as a part of their reimbursement methodology.

F. Benefit systems and reimbursement amounts are determined by payer source, which can be classified into two broad groups: commercial insurance and government payers.

G. Health care responsibility varies by state policies. For example, federal and state programs may offer responsibility for management of health care benefits to a third party, known as Medicare Advantage and managed Medicaid plans. These plans contract with federal and state programs to deliver cost-effective, quality care.

H. The case manager’s involvement with health care reimbursement varies based on the degree and complexity of the:

Often, the case manager works for the payer and interacts with case managers in working across the care continuum. In some instances, the payer case manager is the only individual aside from the patient who continues to be involved in the patient care team throughout the episode of illness.

A. Accountable Care Organization (ACO)—A healthcare organization characterized by a payment and care delivery model seeking to link provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients. The goal of an ACO is to coordinate care among the providers in the organization. Providers may include hospitals, physicians, and other health care providers.

B. Affordable Care Act (ACA)—Officially known as the Patient Protection and Affordable Care Act of 2010 (PPACA). In 2011, the Congressional Budget Office projected that it would lower both future deficits and Medicare spending. Its initial goal was to increase the quality and
affordability of health insurance, lower the uninsured rate by expanding public and private insurance coverage, and reduce the costs of health care for individuals and the government. It introduced mechanisms like mandates, subsidies, and insurance exchanges. Many regulations for insurance companies and employers were included in the act (Department of Health and Human Services, 2014a).

C. Capitation—Often seen in an HMO, capitation pays a set amount paid to a provider (e.g., individual, facility, agency) on the basis of per member per month (or other interval). Regardless of the type or amount of care or service provided or not provided, rates vary based on member demographics (e.g., age, gender). Amount is predetermined and stipulated in the managed care contract between the payer and the health care provider.

D. Coinsurance—Payment by an insured member who pays a share of the payment made against a claim.

E. Commercial insurance—Payers that are not government (e.g., Medicare, Medicaid).

F. Co-pay or co-payment—Predetermined dollar amount for which a member of a health plan is responsible to pay each time a service is rendered (e.g., office visit, emergency department visit, prescription, specialist visit, hospitalization).

G. Deductible—Fixed amount of money a member in a health plan must pay each year before benefits are paid by the insurance company.

H. Diagnosis-related groups—The DRG system is an inpatient classification method providing a means of relating the type of patient being treated (e.g., the medical/clinical condition, acuity, diagnosis) to the costs incurred by the hospital during care provision (e.g., resource utilization and intensity).

I. Gatekeeper—A primary care provider (usually a family practitioner, internist, pediatrician, or nurse practitioner) chosen by or assigned to a health plan’s member. This is most frequently seen within the managed care and patient-centered medical home environments. The provider is responsible for managing all care needs and referrals used by the member.

J. Government payers—Payers that are related to, or sponsored by, state or federal health insurance programs (e.g., Medicare, Medicaid).

K. Health care delivery system—An organizational, comprehensive model or structure used in the delivery of health care services to individuals or target.

L. Health care reimbursement—Payment for health care and services provided by a physician, medical professional, facility, or agency to individuals in need of such services.

M. Managed care—A system of health care delivery that aims to provide a generalized structure and focus when managing the use, access, cost, quality, and effectiveness of health care services.

N. Medicare Shared Savings Program (MSSP)—A key component of the Medicare delivery system reform initiatives that is included in the Patient Protection and Affordable Care Act of 2010. It is a new approach to the delivery of health care. Created to facilitate coordination and cooperation among health care providers to improve the quality of care for Medicare fee-for-service (FFS) beneficiaries and reduce unnecessary
costs. Eligible providers, hospitals, and suppliers may participate in the MSSP program by creating or participating in an Accountable Care Organization (ACO).

O. Minimum data set (MDS)—The assessment tool used in long-term care facility settings as a primary screening and assessment tool. The MDS places a patient in a resource utilization group (RUG), which determines the facility’s reimbursement rate. Measures include physician, psychological, and psychosocial functioning.

P. Network model—A group of physicians and related health care providers (e.g., individual, institutional), contracted with a health insurance plan, from which a member should seek services. In this model, members have the option to go out of network for services. However, in most cases should the member elect to go to an out-of-network provider, his/her out-of-pocket expenses will be higher than those incurred had an in-network provider been seen.

Q. Out-of-pocket—Refers to expenses for health care for which the consumer is responsible. Coinsurance, deductible, and co-payments may be included in the out-of-pocket as well as services not covered by a payer.

R. Predictive modeling—A process used by managed care organizations, ACOs, and population health models to identify which of their members will have the highest future medical costs and will be in need of an increased amount of health care services. This tends to be based on clinical and demographic patient information and past expenditures.

S. Prospective payment system (PPS)—A health care payment system used by the federal government for reimbursing health care providers and agencies for medical care provided to individuals who belong to a governmental insurance plan.

T. Reinsurance—Insurance to cover losses incurred while covering claims that exceed a specified dollar threshold. This is most frequently purchased by health maintenance organization (HMO)-type plans.

U. Value-based purchasing—A demand strategy to measure, report, and reward excellence in health care delivery. CMS uses a penalty and reward strategy based on clinical and financial outcomes that change annually. The penalty and reward for hospitals are based on a percentage of the DRG payment and the hospital’s ability to provide the utmost outcomes compared to other IPPS hospitals.

V. Physician Quality Reporting System (PQRS)—Quality reporting program that encourages individual eligible professionals and group practices to report information on the quality of care to CMS. It is likely that ultimately, the PQRS results will drive physician reimbursement.

A. The Case Management Society of America (CMSA) describes in its standards of practice for case management (CMSA, 2010) that case management practice extends across all health care settings, including payer, provider, government, employer, community, and home environment. It also explains that case managers are involved in the allocation of resources and the utilization review and management where it is necessary for them to be knowledgeable in health care payment and reimbursement methods.

B. This chapter describes the various payment systems found across the health care continuum as well as case management practice in payer (e.g., private insurance, managed care organizations, Medicare, Medicaid) and nonpayer settings.

C. This chapter addresses case management practice knowledge of and proficiency in payer systems, benefits, and reimbursement. The following practice standards described in the CMSA standards of practice are most applicable to this chapter: advocacy, resource management, and stewardship.

D. Case managers apply the knowledge of payment systems and skills of utilization review and management, resource management, cost reduction, and reimbursement-related denials and appeals when executing their roles taking care of patients and their families. They use such knowledge and skills in every step of the case management process.

A. There are several factors that impact the nature of the health care delivery system and its reimbursement structures. As the health care industry continues its dynamic evolution, and innovations in diagnostics and therapeutics occur, the cost of health care services will continue to increase prompting modifications in the reimbursement and delivery systems. Important factors will affect such changes.

B. Commercial payers

C. Government payers

A. Commercial programs