Medical Insurance

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1. Outline and discuss the major categories of reimbursements and costs in a health care organization. How do they influence each other? Managing costs and revenues in the healthcare arena is a complex and often technical process that involves understanding of the interrelatedness of the processes involved, the interplay of many departments and managers within the organization, and the importance of influences external to the organization. (Buchbinder S. B. & Shanks N.H. 2011) Administrators have tremendous power to decide what procedures are medically necessary for each patient and how much will be paid. Prospective forms of payment are really a type of managed care, a system where the payer lays out what is necessary for each patient and informs the provider as to which costs will be paid for and which will not. This form of prospective reimbursement has the advantage of being comprehensive. On the other hand, retrospective payments, or "fee-for-service" reimbursements, maximize the freedom of patients and providers to decide what procedures are best for each individual. The basic difference between prospective and retrospective reimbursement is the level of comprehensiveness versus the freedom of patients. 2. In addition, how do expenses and revenues affect the specific types of budgets outlined? “Cash budget” is a term sometimes used interchangeably with “operating budget,” but it is specifically distinguished from the latter by some authors and organizations. Capital budgeting may be defined as the process of selecting long-term assets, whose useful life is greater than one year, according to financial decision rules. The capital budget determines funding amounts, what capital equipment will be acquired, what buildings will be built or renovated, depreciation expenses, and the estimated useful life to be assigned to each asset. (Buchbinder S. B. & Shanks N.H. 2011) Budgeting is so important and an organization cannot survive with it. You must budget...
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