Institute:Office of National Coordinator (ONC) Workforce Training Curriculum
Component:Introduction to Health Care and Public Health in the U.S.
Unit:Financing Health Care - Part 2
Lecture:Methods of Controlling Rising Medical Costs
Slide content:Cost Drivers: Administrative Costs and Reimbursement Methods Administrative Costs Billing Procedures Rules Process Reimbursement Methods Fee-for-service encourage utilization Disparities within and among insurance plans 8
Slide notes:Administrative costs account for an estimated seven percent of total health care expenditures in the U.S. These costs are more than double the average of other industrialized countries, primarily due to the myriad requirements for claim submission. Payors establish different rules and processes for the submission of claims, and these processes result in additional administrative costs by health care organizations to meet the specific requirements for submission and additional costs by payors to evaluate submissions. Transparency, or lack thereof, on the part of third party payors about the processes involved in determining the value of health care services and reimbursements, leads to variations in payment amounts for the same service among different insurance companies, and in some cases, within the same company. Insurance companies have traditionally looked to providers for discounts in order to cut costs. In a fee-for-service reimbursement scheme, physicians may alter their practice patterns by increasing utilization of fee-based services to offset lost income and to pay practice expenses. This leads to an increased need for additional staff and to a cycle of increasing utilization and administrative costs. Health IT Workforce Curriculum Version 4.0 8