Description of Different Payment Methods: Medical Coding (Essay Sample)

Reimbursement Methodologies: Medical Coding
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Reimbursement Methodologies: Medical Coding
Medical coding systems are important in the reimbursement process as they contain the diagnosis, procedure and prescription for a disease. Also, medical coding provides the information required by insurance companies for reimbursement. Finally, coding enables the healthcare facility to estimate the reliability and effectiveness of treatment (Aalseth, 2014).
Payment systems
The healthcare payment systems used by third party payers are a fee for service, cost-based and prospective payments (Aalseth, 2014). The cost-based system defines how the service provider is reimbursed based on the cost incurred. Majorly, cost-based pay starts with an interim agreement on the amount (Aalseth, 2014). Later on, a final report on the cost is included. On the other hand, prospective payments are characterized by fixed payments made in advance. Prospective payments comprise of DRGs (Hospital Inpatient Payment), APCs (Hospitals Outpatient Payments) and RBRVS (Physician Professional Payment). Finally, the fee for service are payments for the services provided by the healthcare (Rapsilber & DeNisco, 2014).
Medical Necessity and its Impact on Payment
Medical necessity is the healthcare service offered by a physician to a patient. The service should be accepted in the medical practice to evaluate, diagnose or treat a disease. In most cases, health insurance companies refuse to pay for services that do not have any scientific proof (Aalseth, 2014). The outcome has influenced the type of payment system that should be applied to each of the medical necessities that arise.
Effects of Payment Methods on Coding
The different payment methods motivate hospitals to provide excellent services to the patients an...