Purpose Average Cost Based Reimbursement and Risk Theory: Implications for Health Care Policy and Practice Thomas Cox, BA, BSN, MS, MSW, MS Average Cost Based Reimbursement Plans pervade intra- Thomas Cox, RN, MS, MSW. MS School of Nursing, Virginia Commonwealth University, Richmond, VA Mathematician, statistician, social worker, nurse and inter-organizational health care financing throughout the world. These mechanisms are primarily, rather than Academy for Health Services Research and Health Policy Extensive experience in insurance pricing, reserving, incidentally, risk transfer agreements, frequently a form of expense accounting unregulated reinsurance for nominal health care insurers. Model of ACBRP Impact This report focuses on the consequences of risk transfers to Doctoral Student in Nursing professional caregivers (PCs), that place PCs in the roles of Risk Transfer MEDIATING VARIABLES MODERATING VARIABLES OUTCOMES How are Average Cost Based Reimbursement Plans Conclusions insurers rather than providers, seriously upsetting the RISKS Amount of risk OUTCOMES and Traditional Insurance Similar and Different Conclusions balance between these two roles, compromising PC Insurance transfer Claims Management premium Legal Bankruptcy/Profitability Service denials Undiagnosed conditions PCs cannot perform the functions of trusted ACBRP INSURANCE environment financial stability, service quality, and provider-consumer No risk/insurance premium Ethical conflict This data lend beginning support insurance informants and care provision and theto our Portfolio quality Willing providers Claims management Uncertain portfolio results Interest rates Organizational Professional caregiver Future cost estimate errors Portfolio dissatisfaction relationships by greatly increasing overall financial risk for Characteristics Mismatched timing of Characteristics income/expenses Size Size Capital and Income larger model. While management functions underwriting and claims condition variables PCs and their patients… Under-utilized resources Prior Tx Nonexistent for PCs Varies by state Capitalization Borrowing capacity Chronicity (age, gender, ethnicity) Amount None Secure Investments/Cash have some impact on outcomes, implicit in insurance risk assumption. Comparison of Insurer v. Provider Risk Form neuropsychological functioning (the ability Oversight None SAP/GAAP/FASB Risk = Probability of a Loss Greater than Loss Ratio Overall Findings Investment expertise Little Substantial compensation, including risk premiums will Properorganize sequence, and use working to Due to Size Differentials Between Insurer and Provider Usual source of profits Service delivery Premiums and investments more than adolescents can charge. cost memory in aggregators of normal Loss Insurer Provider Relative Capital and Income: PCs that accept insurance risks are under-funded, Risk Management intelligence) as well as adolescent and Reinsurance further depletes loss premiums while undercapitalized, inadequately resourced for the insurance business, Loss Premium Yes Yes Ratio Risk Risk Risk Expense Premium Yes Yes paying reinsurers to assume be criticalPCs should family factors may also the risks in 0. 85 0. 500 0.500 1. 000 unregulated for insurance, and unable to benefit from actuarial and Risk Premium None Yes explaining adaptation outcomes. not have accepted. underwriting expertise. Policy aggregators that transfer such risks avoid Risk management expertise None Actuaries/Underwriters 0. 86 0. 421 0.482 1. 146 Overall Risk Increases Decreases A high index of suspicion of unethical actions should insurance risk, compete unfairly with true insurers, and through differential Who really bears the risk Patients Contracted Providers 0. 87 0. 345 0.464 1. 348 knowledge of insurance and risk theory, advantage themselves at the expense Who is the real insurer Professional caregivers Insurance company be presumed in such relationships – rather than a 0. 88 0. 274 0.447 1. 629 of providers and consumers. Reinsurance Further depletes premium Calculated in premium low index of suspicion. Wolves should not provide Consequences of large losses Unanticipated – Bankruptcy, Anticipated/Managed 0. 89 0. 212 0.429 2. 025 takeovers and consolidations security for lambs. 0. 90 0. 159 0.412 2. 594 Risk Management: Premiums provided to PCs are inadequate Time value of money 1 Substantial investment compensation for the insurance risk assumed, transferring risk to patients. Costs precede income income potential Implications 0. 91 0. 115 0.394 3. 426 Time value of money 2 Premium available for Inadequate premiums implies that reinsurance is not viable as a risk Substantial premium withheld secure investments Unregulated risk transfers to PCs should be 0. 92 0. 081 0.377 4. 670 management strategy for PCs. Delays in payments further exacerbate PC’s Results Highly unpredictable Highly predictable 0. 93 0. 055 0.360 6. 574 Profitability due to inefficiency Unproven assumption Profitability due to LLN prohibited under extant insurance law. Hidden financial experience as do compensation plans that kick in when least needed – and CLT, risk spread, actuarial, underwriting, and insurance transfers in politically supported finance 0. 94 0. 036 0.344 9. 565 when losses are low. ACBRPs violate fundamental principles of risk theory and financial expertise plans must be examined as insurance transfers – 0. 95 0. 023 0.327 14. 389 insurance – eliminating the essential social benefit of insurance. Legal and Ethical Issues even within organizations. The consequences of PC Regulation None State and Federal laws/regs 0. 96 0. 014 0.311 22. 396 Accounting Requirements None SAP/GAAP/FASB insurance risk assumption: financial, ethical, Legal and Ethical Issues: Largely unregulated insurance transfers, with Contract Law/Case Law Emergent Substantial 0. 97 0. 008 0.296 36. 078 criminal, must be explored and documented no specific accounting standards, inadequate regulation and oversight, result in Rights of consumers Unclear Substantial 0. 98 0. 005 0.281 60. 176 ethical conflicts, violated consumer trust, inadequate and unreliable service Ethical issues of service provision Inherent role conflicts Dispassionate/Imperfect Duties Pt v pt, self v pt, family v pt Duty to contractees 0. 99 0. 003 0.266 103. 955 delivery, as well as substantial risk of white collar crime in the form of denial Non-performance of duties Difficult to detect and pursue Much oversight and case Funding Acknowledgements: law 1. 00 0. 001 0.251 186. 054 of services. Partial funding for this presentation from Virginia Portfolio transfer = 1/20th of insurers Average Cost Based Reimbursement Plans Commonwealth University - School of Nursing 1220 Different risk characteristics based on East Broad Street, Richmond, VA. Major funding Capitation contracts, Diagnosis Related Groups plans, Preferred Provider agreements, Managed Care, Unrealistic budgeting constraints in for this work is by the author. normal sampling distribution highly variable units such as nursing. Financial failure risk is higher because of Whereas product line operating characteristics are good models in manufacturing, especially in assembly line operations, the inherent variability in health care settings, particularly when patients are already known ill makes such approaches injurious rather than helpful, since June 23, 2002 undercapitalization, timing, bonus plans they assume higher levels of rationality and predictability than apply.
Pages to are hidden for
"Purpose Average Cost Based Reimbursement Plans pervade intraand inter"Please download to view full document